Tool considered here are Benchmarking and
Pestle as they have shown great results. Lets take an example of Marriott
International and how these tools are applied and what are the results.
Benchmarking tool is used to compare performance
of the business processes and products with the best performances of other
companies inside and outside the industry. It is used for determining whether
the company is performing particular functions and activities efficiently,
whether its costs are in line with those of competitors, and whether its
internal activities and business processes need improvement. It helps managers
to understand the means of performing an activity, to learn how lower costs are
actually achieved, and to take action to improve a company’s cost
International has a great reputation of service excellence, integrity and
innovation. The reason why they are leading in the hospitality industry is
because of their world class facilities like 24hr manned security, providing
leisure and business environment for the customers, standard of living and
other facilities. Location of hotels, easy accessibility, and convenience helps them gain competitive
advantage against their rivals. Also involvement of skillful and educated
employees & proper usage of water and energy helps them by giving better
customer service and efficiency in organization respectively. They analyzed
their performance against other rivals to improve their services to become
leader in the industry.
There are many benefits including reducing
labor cost, common administrative systems, improving data center operations
through consolidation and downsizing, IT planning, implementing new technology,
bringing innovative ideas to the company and finally provide insights of how
other companies organize their operations and processes.
cons which can cause hindrances as it doesn’t really measure the effectiveness
of the processes that happen in organizations. If an organization is new or not
experienced then the costs could be huge. A major disadvantage of benchmarking
is complacency and arrogance. Many organizations relax after excelling beyond
competitors’ standards, allowing complacency to develop. The realization of
having greater advantage soon leads to arrogance, when considerable scope for
further improvements remains.
Mostly companies use benchmarking as
part of a broad strategic process. The best-in-class form of benchmarking
examines multiple industries in search of new, innovative practices. Although
early work in benchmarking focused on the manufacturing sector, it is now
considered a tool that can be applied to virtually any business.
Pestle is again a simple and an effective tool used to identify the external
forces that might affect an organization. It helps identifying the external
factors that may change in the future, exploit the opportunities or defend
against the threats, and asses the potential of a new market.
Political: Political factors represent the
way and extent to which government influences the business. The factors that
could affect Marriott would be danger of terrorism, international relations and
political stability in popular tourist destinations.
Economic: This refers to economic
policies, economic structures and to what degree the economy impacts the
business. The factors that could affect Marriott are slow economic growth in
Asia and debt crisis in Europe.
Sociological: It relates to the
cultural aspects, beliefs, attitudes that can affect the business. People who
have retired and old couples who love to travel still spend a lot of money for
Technological: This factor relates to
the technological aspects, innovations, barriers and how it can affect the
business. Marriott can by affected in the form of online rental services which
lets private individuals rent rooms which exclude hotel taxes as they have a
much lower operating cost.
Legal: This factor relates to the
laws, regulation, legislation and how it can affect an organization. Factors that will impact Marriott is the
status of services provided by private rental rooms who have been fined for violating
rules and regulations.
Environmental: This factor takes
into consideration ecological and environmental aspects that can affect the
business. Increasing prices of oil could affect the travel costs, therefore
there will be less guests affecting the Marriott.
simple and easy to use framework for analysis while involving cross –
functional skills and expertise. It also encourages strategic thinking in an
organization which helps in the overall development of the personnel. To
maximize the benefits of pestle analysis it should be used on a regular basis
to enable identification of trends.
sometimes gather too much data instead of identifying the issues and taking
actions against them. Due to cost and time shortage, the quality of external
information is often restricted. Pestle focusses more on the current situation
rather than long-term issues which are also important.
both these strategy tools are very easy and useful. These tools provide
efficiency and the effectiveness in order gain advantage against other
companies. Benchmarking and Pestle are heavily used in various companies as
they provide them with great results. Both have great potential to identify the
issues and identify the gaps company’s performance and introduce new ways to improve
processes for higher performance.