porters five forces - hotel impossible

Topics: Hotel, Hotels, Strategic management Pages: 4 (796 words) Published: May 17, 2015

Project 1 Paper

Project 1 Paper
The horizontal fracking of shale oil and natural gas has created a new era of prosperity for business owners in small towns across America, largely due to the influx of oil-related business in the area. Williston, North Dakota is one such town, and the recent oil boom has created a surge in demand for housing as oil workers flock to the area. The Missouri Flats Inn is a hotel located in Williston that has been there since it all began, and as a result has been profiting handsomely. But, does the hotel have a business strategy that will help it to survive and prosper as the market evolves and new competition increases? The following is an analysis of the Missouri Flats Inn using Porter’s Five Forces Model.

The Five Forces Model can shed light on the state of competition in an industry in terms of the following five forces: buyer power, supplier power, threat of substitute products of services, threat of new entrants, and rivalry among existing competitors. The relative strength of these forces determines the ultimate profit potential of a business within an industry. Whatever their relative strength, Missouri Flats ownership’s goal should be to find a position in the industry where the hotel can best defend itself against these forces or can influence them in its favor. Buyer & Supplier Power

Currently the Missouri Flats Inn has a favorable position where buyer power is low and supplier power is high. Supply has not kept up with demand for housing in the area, and, as a result, the Missouri Flats Inn enjoys work week occupancy rates near 100 percent on a regular basis. The Missouri Flats Inn has also been able to keep average room rates stable and even increased them 8 percent over last year despite the fact that they offer an inferior product when compared with newer hotels in the area. Threat of substitute products or services

There are currently not many alternatives to the Missouri...
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