The Intercontinental Hotels was established on April 4, 1946 by the Pan American World Airways, with the first hotel opening in Belem, Brazil (IHG 2013, About Intercontinental Hotels & Resorts).
The Intercontinental Hotel Group (IHG) was formed in April, 2003 after Six Continents PLC separated their retail business from the hotels and soft drinks businesses (IHG 2013, IHG Company Overview).
Today, the Intercontinental Hotels Group has more than 4,600 hotels and 674,000 rooms in almost 100 countries throughout the world (IHG 2013, IHG Company Overview). With nine brands, IHG is in thirteen out of the twenty hotel markets and boasts of having the most number of guest rooms, compared to any other hotel company in the world (IHG 2013 IHG Company Overview).
IHG’s vision is “to become one of the great companies in the world by creating Great Hotels Guest Love” (IHG 2013, IHG Company Overview). They plan to deliver this through their best-in-class delivery systems, their talented people, and their portfolio of preferred brands (IHG 2013 IHG Company Overview).
IHG’s culture is centered on a commitment to acting responsibly in everything they do (IHG 2013 IHG Company Overview).
Values and CSR
IHG’s core values are summed up in a concept they call the Winning Ways (Robbins 2006). It defines how the members of the company work and is essential in how they improve their relationships with colleagues, guests, and hotel owners. It also defines IHG’s culture as the leading hotel company in the world (Robbins 2006). The five Winning Ways consist of doing the right thing; showing they care; aiming higher; celebrating difference, and working better together (Robbins 2006).
IHG’s Corporate Social Responsibility
IHG formed a partnership with TED (Technology, Environment, Design), a nonprofit organization that is dedicated to providing doers and thinkers from every discipline with a platform for seeking a deeper understanding of the world and for debating new ideas (IHG 2013, Responsible Business).
IHG has developed Green Engage, an online system that enables the company to reduce their carbon footprint and environmental impact through initiatives such as selecting energy-efficient lighting and choosing suitable building sites (IHG 2013, Responsible Business). Such initiatives have enabled the company to reduce their energy consumption by 25 percent (IHG 2013, Responsible Business).
IHG has also partnered with National Geographic for the celebration of NESCO’s World Heritage Convention in 2009, but today 950 UNESCO World Heritage Sites have been built (IHG 2013, Responsible Business). These places are unspoiled natural landscapes and of unique cultural importance (IHG 2013, Responsible Business). IHG aims that through this initiative, people will be able to appreciate the special places in the world and in turn, work towards protecting nature, communities, and the heritage, as well as preserving them for future generations (IHG 2013, Responsible Business).
Factors in the Company’s External Environment
The political factors that affect IHG would include the political climate of the countries where IHG operates. For example, factors such as terrorism, political unrest, elections, or the change of regimes can affect the way that foreign companies operate in a country. In particular, some political regimes may be more welcoming or open to foreign investors than others, so a change in the elected government officials of a country may either further promote stability for the company or cause instability for the company.
An unstable foreign government can also lead to workers going on strike, normal business operations being suspended, private property being seized or destroyed, or industries being nationalized (How Political, Legal, Economic and Technological Systems
Affect International Business n.d.).
With IHG expanding their business in various countries, they have to be familiar with the regulations that exist in those countries. Even after they have entered a foreign market, IHG must keep itself updated on any changes in these regulations in order to ensure compliance to them. Examples of these laws include those on maximum work weeks, insurances, overtime, minimum wages, and others. In addition, they must be familiar with and compliant to any international laws that may apply to their business.
The culture of the country where IHG chooses to operate will also likely affect the success or performance of its business as this would affect the type of economic activities in the country. For example, a company in the hotel industry will likely thrive in countries such as Romania where 23.9 percent of all accommodation structures are hotels (Cosma and Fleserin 2012). Similarly, it may be beneficial for the company to operate in countries that are friendly towards tourists as tourists would be the primary target market for hotels.
The demographic factors that would affect the external environment of IHG would include the size of the population in the country where they choose to operate in, as well as the number of tourists that the country attracts. The average age of the population should also be considered as the target market for hotels would likely be the customers between the ages of 25 and 50 as these are the customers who are actively working and earning a regular income. In this regard, a country which population is too young or too old may not be the best place for IHG to invest in. As well, the educational level of the country’s population must be considered as it can be presumed that the target market for hotels would consist mostly of those who have attained a higher educational level since it would follow that they would likely have more financial resources to avail of a hotel’s services. In addition, the number of tourists who come to the country must be considered.
The technological factors include infrastructure such as the utility, communication, and transportation systems (How Political, Legal, Economic and Technological Systems
Affect International Business n.d.). Such infrastructures are essential for enabling communication among the various offices and sites of IHG’s operations and it would also ensure that the country’s infrastructure provides for the roads, airports, and ports that would enable the movement of personnel and the distribution of goods. In this regard, IHG should ensure that the country they choose to operate in would have the infrastructure that would be capable of supporting their business. In addition, IHG must keep itself abreast with the latest technologies so that they may be able to employ such technologies in their operations and in their CSR initiatives.
It can be concluded that the different factors that affect IHG’s external environment have different characteristics. For example, while the socio-cultural factors are quite stable, the political and technological factors would be changing rapidly while the demographic and legal/regulatory factors would be changing more slowly. In this regard, the company must be able to adapt to the changes in its external environment. It can be said that overall, this external environment is quite unstable given that there are currently many economic, political, and technological changes occurring in the world. However, with the experience that IHG has had in the industry, along with its proven track record, they are sure to be able to successfully cope with these changes.
Cosma, S. and Fleserin, C., 2012. Strategic approaches of international hotel chains to enter on the Romanian market. Economic Science Series, 21(1), p. 591-595.
European Environment Agency, n.d. Tourist arrivals - outlook from WTO model (Outlook 043) - Assessment published Jun 2007. [online] Available at: < http://www.eea.europa.eu/data-and-maps/indicators/tourist-arrivals-outlook-from-wto-model/tourist-arrivals-outlook-from-wto> [Accessed 9 December 2013].
How political, legal, economic and technological systems affect international business n.d. [online] Available at: < http://www.bergen.edu/faculty/rangiello/global3.html> [Accessed 9 December 2013].
IHG, 2013. About Intercontinental Hotels & Resorts. [online] Available at:
< http://www.ihg.com/intercontinental/hotels/gb/en/global/support/about-intercontinental> [Accessed 9 December 2013].
IHG, 2013. IHG Company Overview. [online] Available at:
<http://www.ihg.com/hotels/us/en/global/about/company-overview> [Accessed 9
IHG, 2013. IHG hotel and room world stats. [online] Available at: < http://www.ihgplc.com/files/pdf/factsheets/factsheet_worldstats.pdf> [Accessed 9 December 2013].
IHG, 2013. Responsible Business. [online]. Available at:
<http://www.ihg.com/intercontinental/hotels/gb/en/global/support/responsible> [Accessed 9 December 2013].
Robbins, T., 2006. Our winning ways. [online] Available at:
< http://www.ihgplc.com/files/reports/arv2006/index.asp?pageid=22> [Accessed 9 December 2013].