CINNAMON GRAND

COLOMBO (CGC)
Business Strategy _ Irushi Ratnaweera_21273184

Internal Analysis
and New Strategy
Recommendation

i.

Executive Summary

This report stems down from the Assignment one done on the Five Star City hotel industry. In this the
focus is narrowed down to an organization from the same industry which is Cinnamon Grand Hotel
Colombo (CGC).
In this the focus has been to identify the CGCs strategic position with aid of many tools, Value chain
analysis was utilized to understand the activities involved in creating value which then continued to
recognizing resources and competences where it was further categorized into threshold and distinctive.
Furthermore identification of core competences allowed understanding the elements which gives the
competitive edge to CGC.
Previous assignment was taken into consideration when the SWOT analysis was done where the
opportunities and Threats were derived from that and the organizations Strengths and Weaknesses
were looked at by different credible sources which then was carried on to the TOWS matrix.
Before looking at the new strategies a brief overview was done on the organizations culture to grasp on
how culture would impact on the new strategies and then a financial analysis with few ratios were done
to compare the financial stance of CGC in terms of its competitors.
Then with the aid of TOWS matrix several strategies were recommended out of which two were further
analyzed in terms of their suitability, feasibility and acceptability and one was taken into consideration
of the implementation stage and discussed on its consequences and stages of implementation.

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Table of Contents
I.

Executive Summary ............................................................................................................................... 1

1.0 Introduction ............................................................................................................................................ 3

2.0 Company Overview ................................................................................................................................. 3
3.0 Internal Analysis ...................................................................................................................................... 3
3.1 Value Chain ......................................................................................................................................... 4
3.2 Strategic Capability: Resources and Competences ........................................................................... 6
3.2.3 Distinctive / Unique Capabilities (Resources and Competences) ................................................ 6
3.3 SWOT................................................................................................................................................... 7
3.4 VRIN Identifying core competences ................................................................................................. 8
3.4.1 What is VRIN ?.............................................................................................................................. 8
3.5 Culture of CGC......................................................................................................................................... 9
4.0 New Strategies ...................................................................................................................................... 11
4.2 TOWS Matrix ..................................................................................................................................... 11
4.2 Strategy one (01) in Focus................................................................................................................. 12
4.3 Strategy Two (02) in focus ................................................................................................................ 15
4.4 Strategy Two (02) Implementation ................................................................................................... 17
Appendices.................................................................................................................................................. 19
Appendix 01 ............................................................................................................................................ 22
Appendix 02 ............................................................................................................................................ 23
Appendix 03 ............................................................................................................................................ 23

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1.0 Introduction
This report consists an Internal Analysis on Cinnamon Grand Colombo (CGC) where the author has
analyzed its strategic position and then provided with new strategies based on its resource,
competences, strengths, weaknesses, financial stance and culture.
Further information with regard to the external environment was utilized from the previous assignment
as the need arose.
Many strategies were recommended while two were comprehensively discussed and one was expended
to the level implementation with consideration of change management and implementation process.

2.0 Company Overview

Cinnamon Grand Colombo (CGC) , under the wing of Asian Hotels & Properties being the flagship hotel
continues to retain its enviable position as the leading hotel in the country (Asian Hotels and Properties
PLC, 2013)
CGC holds the highest number of rooms and the dining options (Restaurants) in the country with a 32%
market share under the city hotel sector. (Asian Hotels and Properties PLC, 2013) Given the scale of the
business the actions, strategies and initiatives of the business has a great impact on the industry as
much as the external environment has on the business.

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3.0 Internal Analysis

Stemming from the Assignment 01 External environment analysis, it is essential to understand the
internal part of the organization in focus to understand its strategic positions.
In doing so firstly we have looked at the activities of Cinnamon Grand Colombo which brings its final
products and services to what it is today.
In order to do that Michael Porters value chain model was adopted

3.1 Value Chain

The value chain describes the categories of activities within an organization which, together, create a
product or service. (Johnson, 2010)

Exhibit 01

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Below depicts the Value Chain of Cinnamon Grand Colombo

Exhibit 02

Sources: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013)

Sources: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013)

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Above presents a comprehensive understanding of the activities that adds value to the final product/
service of CGC, however it is then essential to understand the strategic capability of CGC ( resources and
competences) that allows these activities to be performed in such manner for which below analysis on
resources and competences were done

3.2 Strategic Capability: Resources and Competences

There are two components of strategic capability: resources and competences which then need to be
distinguished between threshold and distinctive or unique (Johnson, 2010)
In analyzing CGCs strategic capabilities identifying the threshold resources and competences were a
clear cut guideline, as we identified as a threat in the Assignment 01 The Tourism Act of 2005 defines
all threshold resources and competences that every five star city hotel must hold, which clearly CGC has
achieved and maintained to remain in the title of the Market leader of the Five Star City hotels in
Colombo.
With all competitors holding similar threshold capabilities what makes CGC stand out as the market
leader is showcased below with the distinction of the capability as to a Physical, Financial or a Human
3.2.3 Distinctive / Unique Capabilities (Resources and Competences)

Sources: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013)
*MICE Meetings, Incentives, Conventions and Events
* GDS Global Distribution Systems

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With the understanding of the distinctive resources and competences, its vital to identify CGCs strengths and
weaknesses while combining the assignment 01s findings on Opportunities and Threats to see the impact of
those towards CGC.

3.3 SWOT
Strengths and Weaknesses will enhance the capabilities and opportunities will give the edge it requires
to grow in the business while been aware of threat will minimize any risk that could come in the way.

Sources: (Assignment 01, 2014) / (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC,
2013)

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Value chain analysis, Resource and competences and SWOT analysis done it is much evident of the core
competences of Cinnamon Grand Colombo that has made it the market leader in the city hotel industry. Below
highlights the summary of the core competences with the aid of VRIN to understand how it gives a competitive
edge to CGC among the rest.

3.4 VRIN Identifying core competences

3.4.1 What is VRIN ?
VRIN stands for four criterias by which capabilities can be assessed in terms of their providing a basis
for achieving competitive advantage:
Value: When the competences provide potential competitive advantage in a market at a cost
that allows an organization to realize acceptable levels of return such as Taking advantages of
opportunities and neutralizing threats , value to customers , providing potential competitor
advantage, cost allowing to making expected return
Rarity: Are those possessed uniquely by one organization or by few others
Inimitability : Those that competitors find difficult to imitate or obtain
Non- substitutability: Is the risk of capability substitution low? (Johnson, 2010).

1.
2.
3.
4.
5.

Strong Brand Image / Flagship hotel under the cinnamon brand

Highest Number of Rooms and the dining options ( Restaurants)
Principal employer of the city holding the most skilled set of employees
Holds the first venue in South Asia to win the Carbon Neutral Certification
Trip advisor, the travel website , positioning Cinnamon Grand at the Zenith as the City Five Star Hotel

Equipped with above highlighted capabilities / Core competences in order to focus on the future it is essential to
see the financial strength of the organization as well.
Therefore below are some financial indicators that enable to understand that CGC has a better stance in terms
of returns looking at ROCE. Further very minimal Gearing ratio indicates fewer debts and less risk its involved in
all in all a very stable and a healthy financial position it stands in

Sources: (The Kingsbury, 2013)/ (Hotel Developers(Lanka) PLC, 2013)/ (Asian Hotels and Properties PLC, 2013)

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3.5 Culture of CGC

Consequently we are then looking at the future and introducing new strategies, In order to introduce
any new elements into the business its essential to evaluate the culture of the business for which below
analysis was done

Source: (Mindtools.com, 2014)

Source: (Asian Hotels and Properties PLC, 2012)/ (Asian Hotels and Properties PLC, 2013)/ (Daily FT, 2011)
Further to above Daily FT, 2011 states of a strategic management paradigm shift where they are
concentrating on focused leadership and strategic direction, to continue the innovative, creative and
pioneering mindset within the team, while adding young blood into the team

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The age distribution of employees also showcases that organization holds a lot of young employees

Source: (Asian Hotels and Properties PLC, 2012)

Above culture analysis gives a positive indication as to companys openness towards innovation and change
along with more young blood been in the workforce more willingness to do new things and be a part of it.
Therefore with the given resources, capabilities, financial strengths , positive culture and also the market
opportunities and threats, it is critical to then focus on the future where below discussed are future strategies

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4.0 New Strategies

In order to look at the strategies for the future of Cinnamon Grand Colombo the tool used was TOWS
matrix as it allows formulating the strategies with the identified capabilities of the organization while
addressing the external environment changes.

4.2 TOWS Matrix

Exhibit

Source: (Software, 2014)

Strength-Opportunity Strategies
1. Continue to focus on sustainability activities around Nuga Gama and give prominence to
its sustainability activities in all promotions and advertising as there is an urge in the
market to associate with brand with sustainability consciousness.
2. Web presence is remarkably high at CGC compared to others in the market, however as
the are market leader they need to benchmark someone even higher, therefore CGC
needs to observe foreign chains such as Shangri-La and Hayatt (soon going to be in Sri
Lanka) and other foreign entities that takes the optimum use of web tools and
benchmark their activities on the web and grow
Strength Threats Strategies
3. Emerging Tourism trends of an authentic experience, CGC is the only place able to
provide that experience in the city, currently there capacity in the Nuga Gama
restaurant is limited to about 40 pax, therefore with the growing trend an increase in
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the capacity will allow more customers to be served with a revenue increase, further
given the current profitability and also been a part of the largest conglomerate of Sri
Lanka CGC can invest on an expansion too.
4. Given the brand image and the market leader position CGC can easily attract good
talent, therefore joining hands with local universities, hotel schools and other
educational institutes to send their identified best candidates for industrial training at
the hotel will allow to identify the talent at the initial level and offer recruitment upon
their completion reducing any threat of talent been sourced by a competitor.
5. Given the financial strength stemming from the John Keels and also the increasing
profit, focusing on more foreign exposure extending to European countries would equip
the talent to cater to the expected increase of tourists in coming years.
Weakness - Opportunity Strategies
6. With the increasing tourist arrival, CGC needs to now focus on tourists and leisure
segments, as they highly relying on corporates currently contributing to a larger
proportion of their revenue
Weakness Threat Strategies
7. As the minimum price has tied the hands of CGC to be competitive in pricing, they can
introduce value addition packages for the minimum rate, ex: Dinner vouchers for more
than three days stay / Loyalty Programme for frequent visitors

However given the financial limitations and other factors such as resource allocation and time
limitations it is important to prioritize on the strategies therefore looking at the future trends , market
volatility and also the increasing competition, Two strategies are narrowed down
Second strategy in focus is introducing the value addition packages to counter threats deriving from the
minimum rate policy as consumers continue to seek for more value.

4.2 Strategy one (01) in Focus

One of the prioritized strategies are strategy No. 02 which states on focusing on the web presence and
take more steps to get best use of it as its soon going to be the biggest marketing and selling tool for
the hotel industry as we identified the growth of consumer reliance on web based tools in the
assignment 01 (Suitability Market trends and existing strengths)
Benchmarking foreign chain such as Shangri-La and Hayatt and other web tool expert entities to
develop the current web presence of CGC
In order to achieve the above it is essential to see currently what CGC is effectively using in terms of web
tools
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1. Social Media

Facebook
Twitter
Google +
Linkedin

2. Cinnamon Grand Travel Blog

3. Online Travel Sites

Red Dot
Wego
HotelsCombined
Hotels.com
Gogobot
Trivago

4. Third Party websites

Anything.lk
Kuoni

Achievements:
43% increase in room nights YOY through web bookings ( Acceptability assurance on return)
Acknowledges by a number of international online magazines interested in partnership
opportunities
What can we do better is what needs to be looked at by benchmarking strategies of global players
1. Given the number of foreign language speaking customers ( other than English) it is necessary
to include the other languages such as Chinese , Spanish and French as optional languages to
view the website

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2. Daily updates on all social media platforms with a common message, not only for promotions.
This enables the brand to be on top of all news feed in every platform making its presence
3. Rewards the interactions, encourage viewers to comment, share, blog, review on platforms by
rewarding them.
4. Invite some travel bloggers to experience the services and review their thoughts on social
media
5. Invest on a 24/7 live chat icon where customers from all over world can query and get same
time feedback , this can be linked to 24/7 call center service already in place - Feasibility
(Manpower)
6. Being a part of a large conglomerate ( Feasibility Money) , make presence in all their websites

By implementing all of these our main purpose is to extend the same product into new markets where
previously CGC have not been able to reach and below showcases how it is depicted according to Ansoff
Matrix, where above strategy will CGC extend its products into new markets by Market Development

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Source: (Sqaki.com, 2014)

As highlighted above this strategy is equipped with suitability, feasibility and acceptability for the
business

4.3 Strategy Two (02) in focus

Value additions aligned with a Loyalty Programme
Minimum rate policy is certainly a threat as it doesnt allow the hotels to give any price discounts even if
they could afford to, therefore with the recession been still recovered in Europe and Price sensitivity
remains a decisive factor in the holiday decision-making process in the years ahead
(Tomorrowtourist.com, 2012) Suitability (Legal Forces)
Therefore as an organization the best is to create more value for people at the same rate , so people are
benefitted for more or sufficient for the price they pay.
In doing so the suggested strategy is to implement on a whole system of value added services, this is
done in many businesses today to enhance the benefits received by the customers for the value they
pay.
Below suggested are the recommendations for the strategy in focus
1. Identifying frequent visitors ,and registering them in the Programme
2. Monitoring their usage, consumption, booking patterns, staying patters, room selections etc.
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3. Based on the information available create a value added package for the individual customer
Example:
1. If one customer stays for more than one week in every two months , offer a free upgrade or a
one night free offer on his third or fourth visit
2. If a customer is a regular visitor for a given restaurant, offer him a voucher at a different
restaurant (This might be a method of market penetration) or at the same restaurant.
These will enhance the customer loyalty which is crucial to minimize the price sensitivity and also will
build up a great data base on consumer behavior while allowing customer experience also an
individualistic and customized one enriching the value of the experience.
If this was looked at from the perspective of Ansoff Matrix model, this clearly is Product Development,
as we are extending the benefits of the service to the existing market.
Looking at the both strategies the second one requires more change management in terms of making
decisions and creating customized offers for individuals while justifying its Feasibility and Acceptability
Feasibility: CGC already are equipped with highly skilled employees along with the required money as
its backed up with sufficient cash flow with the growing revenue YOY.
Acceptability: Less risk involved as it doesnt involve high investment except for a database
management; returns are guaranteed given the enhancement of the service and value additions.

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4.4 Strategy Two (02) Implementation

Firstly it is important to understand what kind of change that above strategy will bring into the
organization with the aid of Balogun and Hope Halleys model

Source: (Kfknowledgebank.kaplan.co.uk, 2014)

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In this scenario , type of change require is Adaptation where its about realigning the way which
currently CGC operates, Itll be same service offered but customized according to individual needs
As explained above itll be implemented in a series of steps as below

Given a period of 5 years this will develop into a large data base that can easily be converted into cash
flow easily by using close insights from this for business decisions.

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5.0 Conclusion
This report consists of a comprehensive analysis of the Cinnamon Grand Colombos strategic position
where its strategic capabilities were extensively analyzed evaluated and discussed allowing to derive on
its current stance in the market.
Eventually looking at the position certain strategic choices were recommended such as market
development and market penetration looking at many avenues of business growth.
Finally one choice was exhausted to the level of strategy in action by looking at it criticality of
implementation. Further then its process was looked at while showcasing the type of change it requires
in the organization.
This comprehensive analysis along with the recommendations will allow the business to be geared up
for the future trends.

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6.0 References
1. Asian Hotels and Properties PLC,. (2012). Asian Hotels and Properties PLC - Annual
Report /12. 1st ed. Asian Hotels and Properties, p.44. [Online]. Available at:
https://www.cinnamonhotels.com/pdf/AsianHotelsandPropertiesPLCAR-2011-12-2.pdf
[Accessed: 15 December 2014].
2. Asian Hotels and Properties PLC,. (2013). Asian Hotels and Properties PLC - Annual
Report 2012/13. 1st ed. Asian Hotels and Properties PLC, p.75. [Online]. Available at:
https://www.cse.lk/cmt/upload_report_file/690_1370249710496.pdf [Accessed: 18
December 2014].
3. Daily FT,. (2011). Cinnamon Grand in strategic management paradigm shift. [Online].
Available at: http://www.ft.lk/2011/11/11/cinnamon-grand-in-strategic-managementparadigm-shift/ [Accessed: 19 December 2014].
4. Hotel Developers (Lanka) PLC,. (2013). Hotel Developers (Lanka) PLC - Annual Report.
1st ed. p.47 , 48, 49. [Online]. Available at:
https://www.cse.lk/cmt/upload_report_file/542_1378724295.pdf [Accessed: 22
December 2014].
5. Johnson, G. (2010). Exploring strategy. 9th ed. Harlow: Financial Times Prentice Hall,
p.84 , 87.
6. Kfknowledgebank.kaplan.co.uk,. (2014). [Online]. Available at:
http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Managing%20strategic%20
change.aspx [Accessed: 21 December 2014].
7. Mindtools.com,. (2014). The Cultural Web: Aligning Your Organization's Culture With
Strategy. [Online]. Available at:
http://www.mindtools.com/pages/article/newSTR_90.htm [Accessed: 20 December
2014].
8. Software, P. (2014). Bplans Blog - Get business plan help, read about starting a business,
and more, with free articles on business planning and small business issues. Bplans Blog.
[Online]. Available at: http://articles.bplans.com/how-to-perform-swotanalysis/http://articles.bplans.com/how-to-perform-swot-analysis/ [Accessed: 19
December 2014].
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9. Sqaki.com,. (2014). Ansoff-Matrix-Market-Development Software Strategy Model

Framework Analysis Management. [Online]. Available at:
http://www.sqaki.com/12/Ansoff-Matrix-Market-Development/ [Accessed: 20 December
2014].
10. The Kingsbury,. (2013). Hotel Services (Ceylon) PLC - annual Report 2012/2013. 1st ed.
The Kingsbury. [Online]. Available at:
http://www.cse.lk/cmt/upload_report_file/543_1370342842.pdf [Accessed: 21 December
2014].
11. Tomorrowstourist.com,. (2012). price sensitivity | Tomorrow's Tourism. [Online].
Available at: http://www.tomorrowstourist.com/blog/?tag=price-sensitivity [Accessed: 18
December 2014].

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7.0 Appendices
Appendix 01

Source : (Asian Hotels and Properties PLC, 2013)

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Appendix 02

Source: (Asian Hotels and Properties PLC, 2013)

Appendix 03
Local Trainings
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.

Sous Chef Programme

Pastry Chef Programme
Kitchen and Restaurant Management
Room Division Programme
F&B Programme
Master Trainer Programme
Wine Appreciation Module
Competency Training
Generic SOP ( Standard Operating Procedures) Training
Technical SOP (Standard Operating Procedures) Training
TAD ( Train Assess and Develop) Trainer Programme
Monthly Exams
Situation Calibration
Soft Skills
Lead to Serve
Professional Presence
Induction and Orientation
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18.
19.
20.
21.
22.
23.

Train the Trainer

PRIDE (Personal Responsibility in Delivering Excellence)
Image Building Programme
English Literacy
Cinnamon Magic
Chauffer Training

Foreign Trainings
1. The John Whyte Bartending Programme - Singapore
2. Advanced Engineering Programme Dubai
Source: (Asian Hotels and Properties PLC, 2012)

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