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Strategic Management, Task3

Evaluation of strategic management concepts applied in corporate settings.

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    Strategic Management, Task3 Discuss the impact of economic conditions and driving forces, particularly digital technology and shifts in buyer preferences, on the hospitality industry as outlined in the given report. How can a company in the hospitality sector develop and execute a strategic plan to navigate these challenges and achieve a sustainable competitive advantage? Support your discussion with examples from the report. Word count requirement: 800 - 1000 words.

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    Subject: Strategic Management, Task3 For this task I used Marketplace simulation from Innovative Learning Solutions to develop a strategic plan for my company and a business report explaining the components of my plan by discussing the strategic management process and describing how the plan should be executed to achieve sustainable dominant competitive advantage by using. A1. ECONOMIC FEATURES Economic Conditions : In an economic recession people lose jobs or tend to save their money because they do not know when things are going to get better. When people slow their spending due to an economic recession, 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 are major in the hospitality Industry which is one of the first industries to get hurt when the economy recesses. The recession affects the hotels growth rate and bottom line causing us to work harder for our money and market share. Hotels are not filling their rooms which mean that they are also not filling their restaurants. It’s more economically smart to eat at home and not travel far from home. A2. DRIVING FORCES

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    Digital technology is such a progressive part of today’s life. Business es could not function without the internet, and the countless software tools that we use to manage our modern enterprise. Today hundreds of millions of people are using social media platforms like Facebook, MySpace, Twitter, and LinkedIn to communicate with one another. These people also spend billions of hours per month surfing the internet which offers man y online tr avel sites such as Travelosity, Orbitz, and Priceline . Our consumers search these sites on a daily basis looking for the best deals. With the expansion of the internet and social media there are thousands of competitors out there selling the same products and services that we are. If you go to any of the online travel sites they automatically show a list of their top deals. If you are not listed there then your competitor has an edge over you. All of t his requires us to rethink our marketing and pricing. Our competitors that are using these technologies to communicate with consumers drive the industry pricing. They are offering discounted room rates in combination with other services such as car rentals or airfare on these sites. Millions of people see these discounts and choose them over us making technology a driving force. The most significant force driving change in this industry is the change in buyer’s preferences which is directly tied to changes in technology. When a buyer’s preference moves away from our products and services, we lose money and clientele. Buyers are often unstable factors that change often and need to be watched carefully.

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    Changes in buyer`s buying habits are often caused by advancements in technology. Technology was responsible for the sales spike that Proaudio4less.com experienced in the summer of 2010, when Apple released the i rig, iClip and several accessories that would allow consumers to play musical instruments on their iPhones . We suddenly found ourselves shipping out large quantities of iRigs , iMics, and other accessories, so we decided to sale iRig accessory bundles . Once the hype the iRigs and other i - accessories, which was short lived, faded we found ourselves storing what was left of those i - accessory bundles and now almost two years later we cannot get rid of them because cheaper substitutes are available at a cheaper cost. Technology made it possible for other companies to make and flood the market with iRig substitutes and thus swayed buyers away from the original iRig products we offer to the competition s cheaper substitutes A2A. PROVISION In order to compete with the driving force of internet technology we need to change our marketing plan and pricing platform. We will need to contact the online public travel companies and create a cost effective marketing plan. The travel site plan should include: • Target users based on final destination and competitive searches. • Re - target users who s earch for specific vacations but don’t book with our hotel . • Con vey available deals via a deals page and custom center spot unit during key seasons. • Showcase our hotels on a destination targeted Airline page through sponsored destination placements. • Increase the awareness and visibility of our hotels through Active and Adventure Travel Guides and Travel Content Targeting. Our social media plan should include: • Create accounts with Facebook, T witter , and Linkedin.

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    • Advertise specials under the sponsored section on Facebook and tweet your specials on Twitter. With Linkedin you have more credibility in the business environment. This site links 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 searchable words 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 experience was. 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 CHARACTERISTICS In an increasingly competitive industry it is essential to produce new and innovative ideas to differentiate a product from others of the same nature. Personal Service and Amenities seem to be two very important characteristics that consumers are looking for. Consumers are looking for personal service, staff going that extra mile to make the guests stay safe and comforting. They are looking for a homelike a tmosphere that is also relaxing but still private. If a hotel can offer this service it makes the hotel stand out from all the rest. It makes it the 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 weather they use them or not. Guests want a choice of breakfast, not just cereal and juice. They are also looking for free snack and bottled water. They also want DVD players, microwaves, coffee makers and mini refrigerators in their rooms, or at least the option to have them. Wireless internet is also key to business and non - business guests.

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    So these t w o differences, amenities and personal services, are very competitive in the choice of a hotel. People are looking to get more bang for the buck. A3A. STRATEGIC GROUP MAP On the chart above you can see that I want our hotel to be a 5 star hotel in the groups of Amenities and Personal Service. A4. SUCCESS FACTORS Service and amenities are two of the key factors to our success. Our hotels are located in beautiful tropical locations and feature extraordinary services and amenities. In addition to a tranquil design and soothing accommodations we offer a state of the art business center. Our guests can slip away for a revitalizing massage or rejuvenating facial at any of our spas. Enjoy a vigorous workout in our 24 - hour fitness center. If they are p lanning an Our Hotel Competitor 1 Competitor 2

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    exciting night out on the town, they can b egin at one of our many beautiful restaurants combining a wonderful balance between work and play. All of our hotels include: • Rooftop Cabana Pool, located on the rooftop of all our hotels with a panoramic tropical view. Guests can enjoy our heated, outdoor pool and may opt to use one of our private cabanas with L - shaped sofas and flat screen TV's. Enjoy poolside cocktails and dining. • Pet - friendly amenities , including a pet bed, lounging mat, bottled water bottle with bowl and gourmet dog and cat treats. • 4,500 sq. ft. Spa , with seven treatment rooms, offering body, face, and nail treatments using products produc ed in Australia. Every product is entirely biodegradable and we are proud that none are tested on animals. • 24 Hour Fitness Center, equipped with Lifecycle stair climbers, recumbent bicycles, treadmills, free weights, and space for stretching • Lobby bar, a wonderful place to unwind with a drink, in a tranquil, candlelit Art Deco environment. • 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 deli cious items from our Restaurant from 6AM - 10PM (Sunday - Thursday) and 6AM - 11PM (Friday & Saturday) Flawless Service And Unparalleled Atten tion

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    With just 150 suites, we offer our guests a level of quality service unma tched by the other area luxury hotel . Our staff of trusted experts will provide the perfect blend of privacy and per sonal attention - from relaxing in - room massages to restaurant recommendations and theater tickets. De - stress and soothe your soul with a visit to our luxury Spa. Whether you're visiting for a romantic escape, family vacation, or corporate retreat , our extraordinary hotel offers a generous complement of services, including: • Knowledgeable concierge • In - room spa ser vices, provided by our luxury Spa • Complimentary newspaper • Same - day laundry services • Valet laundry and dry cleaning • Multilingual staff • Valet parkin g • Guests have in and out privileges at all times. A5. COMPETITIVE FORCES Porter’s Five Factor Model Threat of Substitute Goods A threat from substitutes exists if there are alternative products with lower prices of better quality for the same purpose. They could potentially attract a large portion of the market volume and can reduce the potential sales for existing players. The major substitutes for the hotel industry are camping and recreational vehicles for tourists, corporate guesthouses for business travelers and other accommodations with friends and family. Compared to the hotel industry, these are much cheaper alternatives, making their price values very 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 prices and different levels of service and amenities. The constant challenge is to get the guest to choose our hotel over our competitions. Today t he internet makes the overall market more efficient while expanding the size of the potential market and creating new substit ution threats. With the strength of this threat it would be vital to have a strong internet presence . Another ongoing threat is th at another hotel chain may take customer s away from you with a new internet appro ach or marketing campaign. This is supported by a quote from ( Lancaster, 2003) . “The development of value chain process analysis, supported by collaborative event management over the Internet, the structuring and the sharing of customer focused value chain data, powerfully enhance the performance of value chai ns and of electronic commerce ( Lancaster, 2003) . 5. Bargaining Power of Buyers The bargaining power of buyers determines how much customers can impose pressure on margins and volumes. The end - users of the high - end hotel industry are leisure travelers, business travelers and c ustomers who require space for conferences or other events This industry has a large number of customers who are very small in size. Loss of a single customer has little to no impact on a hotel company and this drives down the buyers bargaining power. However the industry does have several substitutes such as camping and recreational vehicles for tourists, corporate guesthouses for business travelers and other informal means of accommodation with friends and family. Switching cost for all these options is very low, except for the RV. Apart from the provision of accommodation, hotels also provide additional facilities and services such as restaurants, gyms, spas etc. Therefore their contribution to quality as well as cost for the buyer is very high. Business people that choose hotels for traveling are smart people and know how to use the internet. 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 t o tell you where you are going to stay. Porter’s model predicts the elimination of intermediaries. In today’s world hotel guests are more capable of u sing the internet. They can find internet businesses like cheaphotels.com , priceline.com, and expedia.com that will negotia te or discover bargains for the customers . Both of these processes shift the power from the business to the customer as predicted by the Porter model. Having so many options reduce s the risk of finding a better deal for the customer and by doing so makes loyalty a thing of the past , unless a particular hotel can make a unforgettable first impression that deeply impress es the customer with a un ique and valuable experience . Rivalry among existing competitors R ivalry among competitors in the hotel industry is fier ce. When potential customers learn about a hotel on line, the internet reduces the differences among competitors. Customers tend to look for the best amenities for the cheapest price so the tendency is to reduce price s to be competitive. The internet is so vast that it covers several geographical areas so it makes the market much larger which increases the number of competitors. If a customer wants to spend a day in a specific location then they can search for a hotel near that town if the amenities or the price are better. Costs can be mor e expensive in different regions of the country and world making is harder for hotels to reduce their process. Barriers to Entry Brand names are very important in the hotel industry. Companies use their strong brand names to attract new customers and re tain old ones. Economies of scale are also a big factor in this

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