Exam (elaborations)
Unit 7 - Business Decision Making Cosynight study case-Distinction*
- Institution
- PEARSON (PEARSON)
This is an example of a distinction* answer for the Unit 7 business decision-making study case. Cosy night
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Cosynight Exam Practice Assessment ResponseIntroduction
Cosynight are a budget hotel chain operating in the UK hotel market, which is experiencing strong
growth of 3.4% every year for the past 4 years. The owners are however not fully satisfied with the
performance of the business and are keen to take advantage of the growth in the market and to
become more profitable. The owners are considering two possible ways to achieve these objectives:
1. Expand by opening more budget hotels
2. Refurbish their hotels and aim for a more up-market brand positioning
This report will consider both of these options, considering the strengths and weaknesses of both
and the possible opportunities and threats that both option might pose. The report will conclude
with a recommendation for which option should be chosen.
Current Business and Market Trends
The market for hotels in the UK has experienced a growth of 3.4% over the last 4 years and was
worth £19.4bn in 2018 showing that this is a mass market with the potential for profits. This
suggests that it is a good market for a business to be operating in if their objective is to grow and
improve their profits.
The market is very competitive, with large chains holding the majority the market share (such as
Premier Inn and the IHG group). There have been a number of trends in the hotel market recently;
one is the growth of smaller “boutique” style hotels, which might suggest an increase in demand for
this type of hotel, especially as over 90% of customers, said quality of customer service is also an
important factor that they value. The quality of online review was also very important, which may be
due to the rise of sites like TripAdvisor. Providing a good quality experience is therefore likely to be
vital for anyone operating in this market. Low prices and recognised brand names were also seen as
important to customers, which could also have a big influence on their decision about where to stay.
Currently Cosynight are positioned as a budget brand, providing basic rooms for around £65 per
night compared with the average of £87. They currently keep costs low to maintain these low prices,
for example employing students and offering minimum levels of training. This is likely to be helpful in
their current market where customers can find cheap deals and last minute rooms on many booking
and comparison websites. This would possibly support a decision to stay within the budget market
and expand by opening more budget hotels as they can keep their costs low and attract customers
with cheaper deals, allowing them to improve their profitability.
Other trends in the market however could mean that Cosynight could struggle to compete with their
competitors who may be offering a higher quality service and the “boutique-style” feel which have
become more popular. If Cosynight were to change their branding and refurbish their hotels to offer
more luxury rooms, they might be able to attract more customers who value these features. They
would also be able to charge higher prices, which could also enable them to achieve their goal of
improved profitability.
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