Effectuation and Causation Business Strategies - Essay Example

Using the two case studies ICEHOTEL and Travelodge compare and contrast effectuation and causation business strategies”. The case is about Ice hotel projects a challenging journey throughout its way. The main theme line of the case, that is Ice hotel, is situated in the village of Jukkasjarvi, far from kiruna about 17 kilometers at northern Sweden. If we look down to the former story behind the establishment of the ice Hotel, We will find the name Nils Ingle Bergqvist, to whom the idea first has stroked. This idea was actually borned when Bergqvist and his group of some artist and engineer visited n exhibition in a giant Igloo in Sweden. Bergqvist immediately started dreaming with the idea of making accommodation for tourist in a hotel that would be made out of ice. The hotel would be containing of every leisure and luxurious items at its highest possibility (Fitzpatrick & Goldstein, 1994). A bar made out of Ice was also included in to the planning of Bergqvist. To start up with this dream-project Bergqvist needed financial as well as strategic supports. Considerably, Bergqvist only had his dream and a small group of engineers and sculptors. The concept of Icehotel was completely new in its genre, and there were high risk if someone takes this idea for generating business in the arctic region he could be failed with it. The means of the concept that Bergqvist had, was, founding a Hotel along with a bar which would be made with ice. The beds, the tables even though the rooms would be made with ice and the tourist would be provided rain deer skin for better comfort (Jayne, N.D.). There will be a bar, which too would be formed out of ice, where glasses, the bottle shelves, the front counter would be made out of ice (Cerio, 1993). Bergqvist later also came with another idea to make the whole plan more attractive, is to establish a chapel in the boundary of that hotel itself, where newlywed couples may again exchange their vows, couples can marry there too, and people can be baptized in that very church. From the seed of an idea containing an ice made hotel gradually spread its wings to provide many other facilities and rewards to the tourist. Bergqvist was a true entrepreneur in the sense of coming with an exotic idea, and gradually flourish the idea mixing with other possibilities looking into the future. Bergqvist actually wanted to tie up the Ice-bar project with the renowned vodka manufacturing company Absolute. Previously, the tie-up proposal was failed throwing an offer to the well known scotch making company Johnny walker. Bergqvist’s personal will was to make Absolute come on the board. It was again hard for Bergqvist to accept the bitterness of being ignored. As Bergqvist wanted to make the idea to be real at the midst of arctic region in jukkasjarvi quite off bit from the usual tourist spot, it signaled the other companies as a question mark that whether this idea would be rosy in the future or not. This hesitation actually made companies like Absolute and Johnny walker to step back from the deck. Again there was another reason too, that is, the whole concept is depending upon ice, not any solid thing that is permanent in nature. The Ice hotel would be melted in water in the advancement of the summer season. The entire entrepreneurship concept was structured upon a short term establishment. With regard to these issues, Bergqvist found it tough to get a sponsorship for this project. But Bergqvist dreamed about this project with his willpower. He took the strategy of let the stakeholder come to him. He stick to his dream and which produced another idea of cutting the Ice bar’s door just as same as the shape of Absolute bottle’s. This approach reached the high through the visitor’s word of mouth and later, the company; itself came with an interest to tie up with this venture. In the context of the theory Bird-in –hand, Ice hotel’s strategic ideas can be matched. This theory comes generally with 4 questions, that is; is it technically or market wise feasible or not. Secondly, is it financially feasible or not. Thirdly, organizational feasibilities are there in or not, and lastly, determination of the motivational feasibility which is lying in the project. According to market Feasibility, Ice hotel had its prospect. Establishing a hotel in an off bit venue is to attract top line customers who have good financial background as well as who have that zeal for finding something adventurous. Establishing of that concept also encourages people to have a tour to an uncommon place and to have experience that is outstanding. Moreover, Bergqvist’s Ice hotel concept was new, unique, and nobody has thought about it on that particular time. This concept surely can be complemented as hidden treasure. As this kind of concept has not been arisen from any other’s brain that is why it had yield a lot of potentiality to create a market. Though for this, the entrepreneur may need proper strategic framework. According to financial feasibility, if the revenues insures the value of the project, then the project is viable. That means, if the total cost of the project is lesser than the revenue incurred from it, then that project can be said that it is yielding a golden chance for an entrepreneur. Bergqvist’s Ice hotel was unique in its genre, and its type. Financially this project would need a bulk of capital at the initial stage (Lindsay, 2000). But if it is marketed properly or rather say it the promotional activity performed properly, and then a big amount of profit could be generated from it. To form an entrepreneur, the main promoter initially has to capitalize a lot of finance, and other factors related with it. For the Ice hotel case, Bergqvist does not have sufficient capital, manpower and other technical and promotional backups with him. So, in this case, initially, this project was not organizationally viable. Bergqvist actually wanted Absolute to be the main sponsor for the Ice-bar division. But Absolute also found this project to be vague, and could not have a belief upon Bergqvist’s plan. Again, this ice Hotel, if established would acquire a lot of space, including space for the bar and also space for the chapel. This huge formation was supposed to be melted at the time of summer as it all would be created out of ice. For this inconvenience, Bergqvist needed a lot many sculptors, engineers and other technical people on his board. At the very first stage of this project all this was inadequate. And at the last, Bergqvist motivation was feasible undoubtedly. From the very first stage of the project his continuous effort to make it stand out of the usual was notable. He never gave up and stick to his willpower. Somewhere deep inside he would know that the project is becoming the real one, though he had no sponsors with him. But His sincere effort and his intelligence made the impossible to be the possible. Bergqvist knew that new idea would be always likable to the people. To be successful in his project he needed world class, highly efficient and skilled man power and the top-class engineers and equipments. He himself made the fairy tale come in a real mode. The partnership which he wanted to collaborate with, itself came by Tourist’s rumor about the place (Branswell, 2001). Specialist entrepreneur’s borders risk by considering what they can have enough money to lose at each stage, in place of looking for large all-or- nothing prospects. They choose objectives and events where there is upside even if any obstacle comes in. The Ice hotel would not yield any large number of losses as the total structure would be melt ion water in every summer. All he had to bear is the salaries and wages of his engineers and the workers. If they incur any kind of loss, and keep going with the loss for year over year, nothing big would be happening to Ice Hotel’s authority. The hotel venue is not situated in an easy accessible place. For this reason the promotional activities might have taken a lot of finance, because without tourist, this place might end up to a flop project. To avoid this unwanted failure, a proper promotional strategy was needed to inform and attract the people to this place. 3) Crazy quilt prickle says, Expert entrepreneurs put together partnerships with self-selecting collaborators. By finding pre-engagements from these key partners early on in the venture, experts decrease insecurity and co-create the new market with its interested members. It was Bergqvist’s own intension that he will involve Absolute, the renowned liquor brand specially mastered in manufacturing fine vodka since 1877. After Johnny walker’s denial to be a key partner of the Ice bar, Bergqvist went directly to the Absolute brand. Bergqvist found this issue to be exotic to providing vodka to the tourist in the hotel made of ice at the arctic region. Moreover, their business motto for the Ice bar was having the vodka in the Ice, not the ice in the vodka. To the tourist, this idea and the whole concept was a fairy-tale like. At that time this idea was incomparable with any others, who are involved in hotel business. Selecting A liquor brand like Absolute is clearly defining a business strategy of safeguarding this project from uncertainty and unpredictability. As this project was brand new, and unique in its style, and concept, there was huge chance for failure too (Davidson, 2013). Collaboration with a well known organization definitely minimizes the financial risk, and develops the goodwill rapidly. It is assumed that the sponsor partner also has some reputation in the market which will be mixed with the entrepreneur’s own goodwill and gradually it will capture the market jointly. This strategy which Bergqvist had taken initially was accurate. Crazy quilt actually means a patchwork of different shapes, colors, sizes and fabrics. The all together creation makes a remarkable art and style statement. Here in this case, Bergqvist also wanted to create a patchwork with the Absolute, which will lead the business of Ice hotel to a new horizon. With reference of the two case studies, the differences between the two hotels, named Travelodge and Ice hotel, lying on their activity, on their functional Ares too. The hotels are situated in different points, if we take a little look on the globe. Icehotel situated a Sweden, Jukarjarvi, on the other other hand, Travelodge is standing and spreading across the great Britain, both are operating in European continent. Travelodge actually operating the basic hotel business which is quit e common to the other hotel service provider. They have classical business suits as well as accommodation for the family suits. They provide best possible facilities in both types of guests. For business suits, they provides, daily newspaper, fax machine, better internet surfing facilities, provides meeting room if needed, etc. they chose their location at the heart of the Europe to serve both of the purpose. For family suits, they have satellite television, portable coffee machine, luxury bed etc. They are trying to expand wings throughout the whole country with the motto of luxury lodging. (Beirne, 2003).Their market strategy is to grab the highest market position as much as possible in the near future. For this, they are investing huge amount to build a larger number of suits in various places like Greenwich etc Whereas, Ice hotel’s theme line is to find out the adventure out of the nature Tourist who comes here are not for regular lodging basis, rather say, They prefer something new which will be very uncommon and the experience will be stored in memory for lifelong. it was hard for Ice hotel authority to run the business by its own, so they joined hand with the liquor making company absolute and using Absolute’s name and their own unique creation, they are trying to reach the number one position in the market. The Ice hotel authority did not put a stop just establishing a ice made hotel only, they have joined their hands with virgin galactic for space tourism in future (Beirne, & Stanley, 1999). The Ice hotel actually wants to cover every aspect of fine lodging with a touch of a bit romanticism and adventures. Ice hotel also believes in providing warm welcome to the guests to put a sweet imprint in the customer’s hearts. Both the companies are expanding their product worldwide. For the Ice hotel with collaboration of Absolute, is growing faster unlikely the Travelodge. Travelodge had taken a lot of time to reach at the peak point of the total hotel business in United kingdom. Travelodge is operating at the usual hotel business and eager to get the number on e position. They still are not interested to expand their wing in different kind of lodging like the Ice hotel. Whereas Ice Hotel did not stopped their journey operating only in off bit lodging, they are expanding into the field of regular and usual lodging also. Crazy quilt principle comes out with the objectives for start up a project. After being successful by establishing Ice Hotel, they can come out with other unique possibilities in some other venue also. Already ice hotel has become a popular name for unique lodging, they will surely get other sponsorships who will be interested to form a venture with them. As they have started their first venture with joining hands with Absolute, they can continue with this strategy to become a worldwide famous name (Chelminski, 2001). Affordable loss is depending on the project size and the investments they are making upon it. Before stepping on the new project they should have thorough strategic outline containing detailed answers about what, when, how, where questions. As they are an established name, failure of one project may put an imprint upon the e whole brand image. They have to be very cautious about their decisions and the relevancies of the projects. On the other hand the Travelodge may follow the crazy quilt strategy much likely the Ice hotel is using from the very start of its venture. They can have sponsorships in any of its division in any of their project. This strategy will reduce the uncertainty of slowing down of their business activity in future. Their affordable loss will also be minimized if they go for the crazy quilt strategy. The possibility of loss would be divided into the parent and the partnership companies according to their agreement. As they have pioneered in the regular lodging business in the UK, create another product line with some new concept. They can compete with the Ice hotel authority by launching a brand new tourism in space just likely the Ice hotel. To find out a newer genre of lodging business, a thorough research they can organize to sustain in n the ever-changing market. People like changes. With the advancement of the technologies, people are getting used to with a lot of things today. Change always attract people and following the changing formula company can sustain and compete with the others. hence it can be concluded that the customers get attracted to something which is unique and innovative. We can observe the case of ice hotel. However,, there are also customers who require regular products or services for their day to day needs. Thus, in this context we can talk about Travelodge, both the hotels are necessary for serving a specific group of customers and hence the strategies for capturing the 5target market should be different and exceptional for both of them. Reference: Beirne, M. (2006). Travelodges Sleepy Bear Takes a Fishing Trip. Brand week. TRAVELODGE CHECKS IN TO THE COUNTRYSIDE 2011, Farmers Weekly. Sawyer, D 2005, Addleshaws advises on Travelodges Little Chef sale, Lawyer. Beirne, M 2003, Travelodge Gets Ready to Roar, Brandweek. Stevens, S 1997, Travelodge drives repeat via Avis tack, Brandweek. Underwood, E 1994, Travelodge rolls out perk carpet, Brandweek. Dowling, D 1998, Frequent perks keep travelers loyal, American Demographics. Davidson, J 2013, Swedish Ice Hotel Required to Install Fire Alarms, Time.Com. Chelminski, R 2001, cold comfort, Smithsonian. 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