As an industry dealing with services, Tune. com Hotel has its structure that shapes the competition within tourism industry in term of positioning the company to cope best with both the industry environment and to influence the environment in favor of the company (Pearce & Robinson, p. 95).
There are 5 forces analysis in driving industry competition advocated by Michael E. Porter, they are some general principle that applicable for any type of business, particularly for Tune. om Hotel Company set up in Malaysia. This competitive forces shape Tune. com Hotel generic strategy in order to accomplish the company’s objective, that is to accommodate the guests with greater value.
The five forces analyses on tourism industries service from Tune. com Hotel point of view are as follow. 1. The threat of new entrants. A barrier to entry or threat of entry is high, because of the factors below. * Economies of scale Promote better economy of scale.Mark Lankester said, ‘With the opening of more hotels, there has been a better economy of scale and the company has become more cost efficient, and hence the admin fee is no longer relevant and the savings can be passed to the guests,’ (Malaysia Reserve, p.
32). Tune has become more cost efficient as the hotel covers the central, northern southern, eastern and western part of Malaysia. As the results, Tune scraps the administrative fee for bookings. * Product differentiation and brand identity Tune offers greater savings to guests through room charging with the option of special comfort package.It aims to provide convenience and comfort to tourists and holidaymakers as well as businessman. In addition Tune has been named among 20 most innovative brands. Advertisement and customer service develop its brand identification that consequently built customer loyalty.
There have been more than two million guests of Tune. * Capital requirement Tune hotel invests over RM907 million for new hotels indicates a need of large capital injection. The financial services arm Tune Group is Tune Money Sdn Bhd. * Government policyIt is compulsory to register the accommodation premises and to comply with the Laws of Malaysia specifically the Tourism Industry Act.
* Access to distribution channels Sooner a network of 30 hotels worldwide would be built in Malaysia, London, Indonesia, Philippines, Thailand and Australia as stated by the CEO of Tune, ‘This is part of our plan to have 100 hotels around the world by 2015’ () 2. Bargaining power of supplier Supplier power is low as they have limited bargaining power due to the lowest cost operations philosophy of Tune Hotels.The suppliers are King Koil, bedmakers who supply beds to 5-star hotels; Pensonic Holdings Bhd supplies AC, plasma TV and ceiling fan; Nippon Paint, CIMB Bank, supplier of cell phone banking; Orlando; Maggie; and Senses, supplier of amenities. Strong relationship with these strategic partners is biggest advantages of company. 3. Bargaining power of buyer Buyer Power is low as the clients would not bargain any lower because Tune provides 5-star beds at incredible value and affordability and promote the concept pay-as-you-use as well as “no-frills” hotel concept.
. Threat of substitutes Threat of substitutes is high indicated by the instances of stronghold of guesthouses in Kuala Lumpur and hostels available at budget price, moreover high demand existence among students and backpackers. 5. Intensity of rivalry Competitive rivalry within hotel industry is high as the factor of variety customer preferential profile.
There some customers are willing to pay more because of the ideal location and offer attractive packages by the competitors.