Strategic Management, Task3

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Strategic Management, Task3Discuss the impact of economic conditions and driving forces, particularly digital technologyand shifts in buyer preferences, on the hospitality industry as outlined in the given report. Howcan a company in thehospitality sector develop and execute a strategic plan to navigate thesechallenges and achieve a sustainable competitive advantage? Support your discussion withexamples from the report.Word count requirement:800-1000 words.

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Subject:Strategic Management, Task3For this task I usedMarketplace simulation from Innovative Learning Solutionsto develop astrategic plan for my company and a business report explaining the components of my plan bydiscussing the strategic management process and describing how the plan should be executed toachieve sustainable dominant competitive advantageby using.A1. ECONOMIC FEATURESEconomic Conditions:In aneconomic recessionpeople lose jobs or tend to save their money because they do not knowwhen things aregoing to get better. When people slow their spending due to an economicrecession, the first thing they stop spending money on is luxury items. These items include:going out to eat at restaurants, going on trips, and basic recreation. These three activities aremajorin the hospitalityIndustrywhichis one of the first industries to get hurt when the economyrecesses.The recession affects the hotels growth rate and bottom line causing us to work harder for ourmoney and market share. Hotels are not filling their rooms which mean that they are also notfilling their restaurants. It’s more economically smart to eat at home and not travel far fromhome.A2. DRIVING FORCES

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Digital technologyis such a progressive part of today’s life.Businesses could not functionwithout the internet, and the countless softwaretools that we use to manage ourmodernenterprise.Todayhundreds of millions of people are using social media platforms likeFacebook, MySpace,Twitter, and LinkedInto communicate with oneanother.These people also spend billions ofhours per month surfing the internet which offers many online travel sites such as Travelosity,Orbitz, and Priceline. Ourconsumers searchthese siteson a daily basis looking for the bestdeals.With the expansion of the internet and social media there are thousands of competitors out thereselling the same products and services that we are.If you go to any of the online travel sites theyautomatically show a list of their top deals. If you are not listed there then your competitor has anedge over you.All of thisrequiresus to rethink our marketing and pricing.Our competitors thatare using these technologies to communicatewith consumers drive the industry pricing. They areoffering discounted room rates in combination with other services such as car rentals or airfareon these sites. Millions of people see these discounts and choose them over us makingtechnology a driving force.The most significant force driving change in this industry is the change in buyer’s preferenceswhich is directly tied to changes in technology. When a buyer’s preference moves away from ourproducts and services, we lose money and clientele. Buyers are often unstable factors that changeoften and need to be watched carefully.

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Changes inbuyer`sbuying habitsare often causedby advancementsin technology. Technologywas responsible for thesales spikethat Proaudio4less.comexperienced inthe summer of 2010,when Applereleased the irig, iClip andseveral accessoriesthat would allow consumers to playmusical instruments ontheir iPhones. Wesuddenly foundourselves shippingout largequantitiesof iRigs, iMics, and other accessories, so we decided to sale iRig accessorybundles.Once thehype the iRigs and other i-accessories, which was short lived, faded we foundourselves storingwhat was left of those i-accessorybundlesand now almost two years later we cannot get rid ofthem because cheaper substitutes are available at a cheaper cost.Technology madeit possible forothercompanies tomake and flood the market with iRig substitutes and thus swayed buyersaway from the originaliRig productswe offer to the competitions cheaper substitutesA2A. PROVISIONIn order to compete with the driving force of internet technologywe need to change ourmarketing plan and pricing platform.We will need to contact the online public travel companiesandcreate a cost effective marketing plan.Thetravel siteplan should include:•Target users based on final destination and competitive searches.•Re-target users who search for specific vacations but don’t book with our hotel.•Convey availabledeals viaadeals page and custom center spotunit during key seasons.•Showcase our hotels on a destination targeted Airline page through sponsored destinationplacements.•Increase the awareness and visibility of our hotels through Active and Adventure TravelGuides and Travel ContentTargeting.Our social media plan should include:•Create accounts with Facebook,Twitter, and Linkedin.

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•Advertise specials under the sponsored section on Facebook and tweet your specials onTwitter. With Linkedin you have more credibility in the business environment. This sitelinks you with business professionals and you can offer better deals to them.In-house marketing plan:•We need to revamp our website by hiring a marketing firm that knows the key searchablewords to get us within the top 10 listed sites in a search.•Offer package deals our website.•Make our website more user friendly by asking our guests to tell us how their experiencewas. Did they have an easy or hard time booking.•Offer free wifi to all guests.These are some things that need to be done in order to compete with today technological world.A3. DIFFERENTIATING COMPETITIVE CHARACTERISTICSIn an increasingly competitive industry it is essential to produce new and innovative ideas todifferentiate a product from others of the same nature.Personal Service andAmenitiesseem to be two very important characteristics that consumers arelooking for.Consumers are looking for personal service, staff going that extra mile to make the guests staysafe and comforting. They are looking for a homelike atmosphere that is also relaxing but stillprivate. If a hotel can offer this service it makes the hotel stand out from all the rest. It makes itthe best place for families, friends and business professionals to stay.Amenities, what are they really? Amenities are the free things that a hotel offer to guests weatherthey use them or not. Guestswant a choice of breakfast, not just cereal and juice. They are alsolooking for free snack and bottled water. They also want DVD players, microwaves, coffeemakers and mini refrigerators in their rooms, or at least the option to have them. Wirelessinternet is also key to business and non-business guests.

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So these two differences, amenities and personal services, are very competitive in the choice of ahotel. People are looking to get more bang for the buck.A3A. STRATEGIC GROUP MAPOn the chart above you can see that I want our hotel to be a 5 star hotel in the groups ofAmenities andPersonal Service.A4. SUCCESS FACTORSServiceand amenities are two of the key factors to our success.Our hotels are located in beautiful tropical locations and feature extraordinary services andamenities. In addition to a tranquil design and soothing accommodations we offer a state of theartbusiness center. Our guests can slip away for a revitalizing massage or rejuvenating facial atany of our spas. Enjoy a vigorous workout in our 24-hour fitness center.If they are planning anOur HotelCompetitor 1Competitor 2

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exciting night out on the town, they can begin at one of our many beautiful restaurantscombining a wonderful balance between work and play.All of our hotels include:•Rooftop CabanaPool,locatedon the rooftop ofall our hotels with a panoramic tropicalview. Guests canenjoy our heated, outdoor pool andmay opt to use one of ourprivatecabanas with L-shaped sofas and flat screen TV's. Enjoy poolside cocktails and dining.•Pet-friendly amenities, including a pet bed, lounging mat, bottled waterbottle with bowland gourmetdogand cat treats.•4,500 sq. ft.Spa,with seven treatment rooms, offering body, face, and nail treatmentsusing products produced in Australia. Everyproduct is entirely biodegradable and we areproud that none are tested on animals.•24 Hour Fitness Center,equipped with Lifecycle stairclimbers, recumbent bicycles,treadmills, free weights, and space for stretching•Lobby bar,a wonderful place to unwind with a drink, in a tranquil, candlelit Art Decoenvironment.•15,000 sq.ft.of event space,encompassing seven meeting rooms, an outdoor garden,and the delightful Palm Terrace•Business Center,located on the second floor, adjacent to the conference rooms,equipped with computers, Internet access, and a print station.•Room Service,offering delicious itemsfrom our Restaurantfrom 6AM-10PM (Sunday-Thursday) and 6AM-11PM (Friday & Saturday)Flawless Service And Unparalleled Attention

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With just 150 suites, we offerour guests a level ofquality serviceunmatched by the other arealuxury hotel.Our staff of trusted experts willprovide the perfect blend of privacy and personalattention-from relaxingin-room massages to restaurant recommendations and theater tickets.De-stress and soothe your soul witha visit to ourluxurySpa. Whether you're visiting for aromantic escape, family vacation, or corporate retreat, our extraordinaryhotel offers a generouscomplement of services, including:•Knowledgeable concierge•In-room spa services, provided by our luxurySpa•Complimentary newspaper•Same-day laundry services•Valet laundry and dry cleaning•Multilingual staff•Valet parking•Guests have in and outprivilegesat all times.A5. COMPETITIVE FORCESPorter’s Five Factor ModelThreat of Substitute GoodsA threat from substitutes exists if there are alternative products with lower prices ofbetterquality for the same purpose. They could potentially attract a large portion of the market volumeand can reduce the potential sales for existing players.The major substitutes for the hotel industry are camping and recreational vehicles fortourists,corporate guesthouses for business travelers and otheraccommodations with friends and family.Compared to the hotel industry, these are much cheaper alternatives, making their price valuesvery high and the switching costs very low.

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In the hotel industry there are other hotels everywhere you look. Each hotel has a range of pricesand different levels of service and amenities. The constant challenge is to get the guest to chooseour hotel over our competitions.Today the internet makes the overall market more efficientwhile expanding the size of the potential market and creating new substitution threats. With thestrength of this threat it would be vital to have a strong internet presence.Another ongoing threat is that another hotel chain may take customersaway from you with anewinternet approach or marketing campaign. This is supportedbyaquote from(Lancaster,2003).“The development of value chain process analysis, supported by collaborative event managementover theInternet, the structuring and the sharing of customer focused value chain data,powerfully enhance the performance of value chains and of electronic commerce(Lancaster,2003).5.Bargaining Power of BuyersThe bargaining power of buyers determines how much customers can impose pressure onmargins and volumes. The end-users of thehigh-end hotel industry are leisure travelers, businesstravelers and customers who require space for conferences or other eventsThis industry has a large number of customers who arevery small in size. Loss of asinglecustomer has littleto noimpact on a hotel company and this drives down the buyersbargainingpower. However the industrydoes have several substitutes such as camping and recreationalvehicles fortourists,corporate guesthouses for business travelers and other informal meansofaccommodation with friends and family. Switching cost for all these options is verylow,except for the RV.Apart from the provision of accommodation, hotels also provide additionalfacilitiesand services such as restaurants, gyms, spas etc. Therefore their contribution toqualityas well as cost for the buyer is very high.Business people that choose hotels for traveling are smart people and know how to use theinternet. Today it is very simple to go online and book your hotel. There is no longer a need for

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travel agents, corporate travel consultants or middle men of any kind to tell you where you aregoing to stay. Porter’s model predicts theelimination of intermediaries.In today’s world hotel guests aremore capable of using the internet. Theycanfindinternetbusinesses like cheaphotels.com, priceline.com, and expedia.com thatwill negotiate or discoverbargains for the customers.Both of these processes shiftthe power from the business to the customer as predicted by thePorter model. Having so many optionsreduces the risk of finding a better deal for the customerand by doing so makes loyaltya thing of the past,unless a particular hotelcan make aunforgettable first impression thatdeeply impressesthe customer with a unique and valuableexperience.Rivalry among existing competitorsRivalry among competitors in the hotel industry is fierce. When potential customerslearn abouta hotel on line, the internet reduces the differences among competitors.Customers tend to lookfor the best amenities for the cheapest price sothe tendency is to reduce pricesto be competitive.Theinternetis so vast thatit covers severalgeographical areas soit makes the market muchlarger which increases the number of competitors.If a customer wants to spend a day in aspecific location then they can search for a hotel near thattown if the amenities or the price arebetter.Costs can be moreexpensive in different regions of the country and world making isharder for hotels to reduce their process.Barriers to EntryBrand names are very important in the hotel industry. Companies use their strong brand names toattract newcustomers and retain old ones. Economies of scale are also a bigfactor in this

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