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Banyan Tree Essay

1362 Words6 Pages

Analysis of the problem
Since inception in 1994, Banyan Tree Group grew to become a leader in the hospitality industry with rapid expansion in the Asia Pacific market. With two successful brands under the group umbrella, Banyan Tree and Angsana the group turnover in 2006 was USD 335 million with a profit amounting to USD 111 million.
Launching in undiscovered destinations, Banyan Tree set up operations as part of the global expansion strategy of the company by offering ecological and cultural experiences to cater to their global clientele. Understanding that for most of their global clientele discovery, adventure, relaxation, romance and culture were the motivating factors to choosing a destination, the company chose unique locations offering …show more content…

This was a turning point for Banyan Tree because Ho came to realise that in order to deflect the influence of external calamities, the company would need branch out from the Asian market and establish itself as a global player. In addition the hospitality industry has peak months and off seasons which differ from market to market, global distribution reduces the seasonal impact. Inspired by the success stories of Samsung and Hyundai, Ho decided to expand his successful niche brand to the global market. Ho offered clear direction for rapid expansion to counter these external factors. This included fund raising through investors and country-wise strategies (Morgan, …show more content…

Entering new markets to reduce the impact of disease outbreaks and terror attacks also was a successful diversification strategy used by Ho.
Though diversification is the favourable choice it requires considerable investment and a proficient workforce. Furthermore another external disaster could negatively impact the outcome. (Ansoff, 1958)
In order for diversification to succeed in a new market, Banyan Tree needs to first evaluate the following:
Attractiveness: Do customers find the industry attractive?
Cost of Entry: Will it put a considerable strain on the company’s capital?
Better off: Is there value in the offering? (Porter, 1987)
If the results to these questions are favourable then Banyan Tree should consider diversification and entering the new market. The most profitable approach for global expansion would be as follows:
(1) Accurate analysis of the strengths, challenges, opportunities and threats (SCOT) to offer a better understanding on the hospitality industry and the key source markets (2) Maintain the unique brand identity by continuing to be the pioneers in the hospitality

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