Sea Paradise Hotel Competitive Advantage Concept - Case Study Example

Critique of Strategies and Tactics Name College Course Tutor Date Table of Contents Title Page 1 Table of Content 2 Abstract 3 Introduction 4 Strategic Decision 4 Competitive Advantage Concept 6 The Five Force Analysis 7 Decision’s Impact on Employees 8 How the Team Made Decisions 10 Alternative Decision Making Methods 10 Team Structure 11 Technical Analysis of the Trading Results 12 Recommended Organizational Structures 12 Recommendations on Appropriate Marketing Strategies 13 Bibliographies 14 Abstract Group 8 was the weakest team amongst all the other teams representing information regarding their hotels. The hotel under scrutiny is Sea Paradise Hotel whose gross operating profit, room market share, relative market share, guest satisfaction, and staff satisfaction is low because of several identifiable problems. The team applied inadequate marketing strategies; its competitive edge was low; and the hotel did not motivate its employees but instead decided to exploit them and cut training expenses. These issues will be described in the paper in details. The paper will also provide several recommendations on the type of strategies and decision making processes that Sea Paradise Hotel should apply to realize success. Critique of Strategies and Tactics Introduction Sea Paradise Hotel has been having problems compared to other hotels brought forward by other groups. The gross operating profit, room market share, relative market share, guest satisfaction, and staff satisfaction of the hotel has affected the overall ranking negatively. These issues have occurred because of the ineffective decisions that the team has made regarding the operations of the hotel ranging from the marketing strategies to employee expectations. Nevertheless, the paper will identify all the issues that affected the firm negatively and provide solutions on how to rectify them. Strategic Decision Team 8 introduced focus strategy, cost leadership strategy, and differentiation strategy to strengthen its competitive advantage. Its intention was to ensure that Sea Paradise Hotel fragments its marketplace and concentrate on the niche market. The team also introduced cost leadership strategy to help the company sell consumers’ quality products at reduced prices. Lastly, the team introduced the differentiation strategy to sell unique products to consumers that would increase the hotel’s competitive advantage. Team 8 failed to select the best marketing strategies for the hotel based on the reduced gross operating profit; room marketshare; relative marketshare; guest satisfaction; and staff satisfaction. Marketing approaches for hotels entail planned promotion techniques and tools that are significant in attaining the competitive advantage. Hotels concentrate on attracting regular consumers and attracting prospective consumers from diverse regions while designing their marketing strategies (Clulow, Gerstman, and Barry 2003, p.220). Team 8 should have focused on simpler marketing strategies such as personal selling, public relation, and direct marketing to attract and retain consumers, as well as attain a competitive advantage rather than focusing on positioning strategy and pricing tactics. These strategies will help the hotel to propel its gross operating profit, room market share, relative market share, guest satisfaction, and staff satisfaction to greater heights. Applying personal selling at Sea Paradise Hotel will target domestic consumers in the marketplace. Personal selling assists in the development of connections with domestic markets. This marketing strategy offers a favour in the establishment of augmented activity levels from the business world (Homburg, Sabine, and Harley 2009, p.90). The hotel will offer Sea Paradise Hotel with added attention from consumers and local tourists towards services offered at the hotel. At this point, Sea Paradise Hotel will benefit from person selling through brand improvement in the marketplace. The second marketing strategy that Team 8 could have benefited from is public relation. This strategy entails endorsing services and facilities by demonstrating Sea Paradise Hotel as an important member of a local community (Shaw 2012, p.35). Hotels create sound consumer bases and public relationships by engaging in events and functions at individual domestic levels. Sea Paradise Hotel would benefit from public relations since it facilitates the spread constructive word of mouth about the hotel services and facilities. The third marketing strategy that Team 8 could have benefited from is direct marketing. Sea Paradise Hotel could benefit from direct marketing through the channel of public relation and travel agencies (Shaw 2012, p.45). These organizations create contacts with businesses and arrange their meetings in an effort to establish hotel services contracts with them. A travel or public relation agency form a contract with the hotel though packaged tours that promote corporate and consumer relations. The fourth marketing strategy that Team 8 could have benefited from is website-based marketing. Sea Paradise Hotel could benefit from website-based marketing as it would create interactive relationships with prospective consumers (Shaw 2012, p.50). Team 8 could have created a website for Sea Paradise Hotel and put information concerning its service quality being offered. The website should also offer online reservation and cancellation facilities. Team should also put the hotel’s address in different travel agencies to help consumers locate the hotel based on their requirements. These marketing strategies will help Sea Paradise Hotel to become a famous brand and good image in the market. Hall, Ariss, and Todorov (2007, p.277) posit that an increase in the industry’s market share will help increase the hotels’ gross operating profit, room market share, relative market share, guest satisfaction, including staff satisfaction that will be caused by increased remuneration as a result of increased profits. Competitive Advantage Concept Competitive advantage refers to a benefit that an organisation bears over its business rivals, permitting it to produce better margins or sale as well as retain consumers compared to its competitors (Nightingale, 2008, p.34). There are several forms of competitive advantages, such as consumer support, distribution system, product offering, and organisation’s cost structure. Competitive advantage provides an organisation an edge over its competitors and the capacity to produce a better value for an organisation and its stakeholders. Competitors will not be able to neutralize a business if it has sustainable competitive advantage. Sea Paradise Hotel’s competitive advantage includes its ability to provide hotel services and facilities at cheaper prices. The hotel’s location near an airport, seafront, and transportation system gives it a better competitive advantage over its business rivals. The Five Forces Analysis The five forces analysis of Sea Paradise Hotel can be measured by the hotel’s strengths, weaknesses, opportunities, and threats (SWOT analysis). The hotel’s strength includes its strategic location where consumers can effortlessly access rail and road networks. The hotel’s weakness includes inadequate marketing strategies that have allowed competitors to take a huge market share in the industry. Sea Paradise Hotel can benefit from various opportunities, such as vast market size from being near an airport, shopping centre, and seafront. The hotel also has an opportunity to expand its market by exploring budding, unexploited marketplace. Other opportunities include exploitation of business opportunities established by famous tourist festivals. Regrettably, Sea Paradise Hotel bears several weaknesses, such as cutthroat competition from other hotels that later affects its marketing performance. Sea Paradise Hotel capabilities allow it to compete in its industry environment. For instance, the fact that the hotel has a strategic location allows increased consumers. Customers prefer hotels that are located near rail or road networks. The hotel clients do not have to more to longer distance before seeing its location. The fact that Sea Paradise Hotel is located near the main shopping centre allows gives it an opportunity to attract many clients. The hotel is also located near an airport meaning that it can accommodate foreign tourists. Team 8’s decision impacts on human beings (employees, customers, the community and the owners) Team 8’s decision had huge impacts on human beings, such as employees, customers, the community and the owners. The team’s decisions affected employees negatively. For instance, managers’ had decided to reduce operation costs through employees’ exploitation and reduction of training finances. This was a bad move for Sea Paradise Hotel because it led to reduced consumer satisfaction and increased employees’ turnover rate. Exploiting employees was a very bad decision made by the team. Employees’ exploitation also means that the hotel is underpaying them or offering them inequitable remunerations. This could negatively affect the morale of employees that would in return reduced productivity levels. Low levels of productivity also results to low consumer satisfaction. Reduced consumer satisfaction could have reduced the number of clients visiting the hotel. Consumers play an integral part of a business operation. Without consumers, businesses would close their operations that would in turn lead to reduced profits. The team’s decision affected the owners too. When clients fail to visit the hotel, this means that the owners will seize to receive the amount of profits and proceeds they are used to. Lack of proceeds from the hotel could also affect the community negatively. Nightingale (2008) states that lack of enough money and resources mean that the hotel will be unable to take part in corporate social responsibility (p.34). Just like most businesses, the hotel must involve in CSR where hotel employees are involved in cleaning the community, visiting sick people or orphans, as well as visiting old people. The team’s decision also affected the community negatively. The fact that consumer satisfaction reduced in Sea Paradise Hotel means that local businesses around the hotel were negatively affected (Siguaw and Enz 1999, p.42) Tourists and locals visiting the hotel tend to buy other items from local businesses/shops. Therefore, reduction in the number of employees’ means that local businesses will suffer in return, thus negatively affecting the community. Sea Paradise Hotel’s operational plan was not fully effective. This can be seen when management decided cutting the amount of money to train its staff. The hotel employees’ require adequate training to help the business remain in the market and increase the consumer base by learning how to handle consumers (Thareja 2007, p.1). Sea Paradise Hotel’s marketing plan was not effective. The team could have focused on other marketing strategies rather than focusing on positioning and price tactics. It could have applied simpler marketing approaches like personal selling, public relations, direct marketing, and website-based marketing. The intended strategy of Sea Paradise Hotel was not effective. The approach entailed strengthening its competitive benefit by combining the focus strategy, cost leadership strategy, and the differentiation strategy. These cost benefit strategies could not have benefited the hotel. Therefore, the team could have concentrated on one strategy, such as the differentiation strategy and focus on it. The differentiated strategy would have helped Sea Paradise Hotel to establish unique products and services for its current and prospective consumers compared to its competitors. The realized strategy was not effective for Sea Paradise Hotel. The fact that the team decided to exploit the hotel’s employees was a bad idea. It is important for businesses to respect and motivate their employees (Robbins and Judge 2007, p.56). Motivated employees lead to increased consumer base and profits. Alderfer’s ERG theory states identifies three major needs namely growth, relatedness, and existence. It also posits that employees must relate with other employees or management to be contented. Employee satisfaction leads to consumer satisfaction too. The hotel exploited its employees that could have caused reduced consumer satisfaction (Dominici and Guzzo 2010, p.3). The hotel did not benefit from applying the high initial pricing strategy. Instead, the approach solved the hotel’s problems temporarily since they later emerged. The hotel received increased consumer complaints, the management failed to improve the hotel’s value, and the hotel started to charge increased rates compared to competitors. How the Team Made Decisions The team made decisions by brainstorming. This approach involved all Team 8 members sitting together and giving ideas through open association. The members mostly focused on giving ideas instead of evaluating them. As a team leader, I selected one member to write those ideas on the blackboard for every team member to see them and attempt to enhance them. The team selected this technique because it could help members to separate complex issues and solve them independently. Alternative Decision-making Methods The team could have also used other decision making methods. The first method is NGT (Nominal Group Technique). Nutt and Wilson (2010, p.90) state that NGT is comparable to brainstorming technique apart from the fact that it is further controlled. Members in NGT create the team in name only and work separately, breeding ideas to solve the issues personally, in writing and silently. Members fail to interact with one another and avoid robust personality dominance. The technique encourages personal creativity. The team leader gathers all ideas generated by team members and note them down on a chalk board for every member to see. A leader can also ask every member to give their ideas as he/she writes on the chalk board. Team 8 could have also used Delphi technique. According to Bouyssou, Didier, Prade, and Marc (2010), Delphi decision making approach is an adjustment of NGT although it entails acquiring experts’ opinions physically and independently from one another (p.56). This decision making approach handles problems that are vague in nature. Additionally, the team could have also used didactic decision making technique. This approach exists in particular situations, although it is an outstanding technique when such a circumstance subsists. For instance, the team members may be required to make a decision on whether to use differentiation strategy to gain competitive advantage. Team Structure The structure of the team included; a team leader who guided the problem solving and discussion. It also had a scribe who reported the attendance of the team at every meeting. The other individual was a communicator who went to the team leader for added clarification or assistance and ensured that every team member understands everything. Diagram 1: Team Structure Technical Analysis of the Trading Results The total revenue of Sea Paradise Hotel presented by 138,773 which was the second lowest figure. The room revenue was also low at 53, 800. The hotel’s gross operating profit was negative, -3,828. The working capital is also at a negative digit, -1,315,290. The owner’s equity is 4,750,000 while the income after taxes is -65,377. This indicates that the company is incurring losses. Therefore, the hotel should use capacity statement to market or promote itself and its skills and capacities that market the hotel, its products and services, and why the hotel is the best in the region (Sainaghi, Phillips, and Corti 2013, p.150). The capacity statement should include the hotel overview, the services offered, qualification statement of the board of directors or senior employees that must incorporate education information, skills, and experience, and an assurance and statement of what consumers can anticipate from the hotel. It would be very critical for the capability statement of the hotel to include a record of past clients. Recommended Organizational Structures Some of the recommended organisational structures for the team would include functional structure. Functional structure is organized so that every portion of a team or organisation is grouped based on its purpose. For instance, some team members may be assigned certain tasks while others may be given another task. The drawback from this technique would be reduced communication and coordination but team members can prevent that by ensuring that they cooperate and communicating during and after their tasks. The second organisation structure recommendable for the team is matrix. This structure is a combination of functional and divisional structures. Unlike functional structure, matrix structure will require two team leaders each running his/her team and they will be operating at a similar level a covering similar topics. Recommendations on Appropriate Marketing Strategies Some of the recommendations for Team 8 could be on marketing strategies. Marketing is a very vital process in any business. Therefore, the team should select marketing approaches that will reach the locals and foreigners. For instance, Sea Paradise Hotel can use website-based marketing, personal marketing, public relation, or direct marketing. It should also focus on one competitive advantage marketing technique rather than forming a hybrid of techniques. Secondly, Sea Paradise Hotel should invest on its employees through training because it helps employees to learn about the respective industry and how to handle consumers. The hotel should motivate its employees rather than exploiting them in an effort to increase consumer satisfaction that is fostered when employees are happy with their jobs. Additionally, the hotel should invest in research and development so that it can perform studies about the industry and consumer preferences. Bibliography Clulow, V., Gerstman, J., & Barry, C (2003). ‘The Resource-Based View and Sustainable Competitive Advantage: The Case of a Financial Services Firm’. Journal of European Industrial Training vol. 27, no. 5, pp. 220–232. Dominici, G & Guzzo, R 2010, “Customer Satisfaction in the Hotel Industry: A Case Study from Sicily,” International Journal of Marketing Studies, vol. 2, pp. 3-12.  Hall, CC., Ariss, L. & Todorov, A. (2007) “The Illusion of Knowledge: When More Information Reduces Accuracy and Increases Confidence.” Organizational Behavior and Human Decision Processes, vol. 103, pp. 277-290 Homburg, C., Sabine, K., & Harley K. (2009) Marketing Management - A Contemporary Perspective, London: SAGE. Nightingale, J (2008) Think Smart - Act Smart: Avoiding the Business Mistakes That Even Intelligent People Make, New York: John Wiley & Sons. Nutt, P. & Wilson, D. (2010) Handbook of Decision Making, New York: John Wiley & Sons. Robbins, SF & Judge, TA. (2007) Organizational Behaviour. London: Pearson Education Inc Sainaghi, R, Phillips P & Corti, V 2013, “Measuring Hotel Performance: Using a Balanced Scorecard Perspectives Approach”, International Journal of Hospitality Management, Vol. 34, no. 1, pp. 150-159. Shaw, E. (2012) "Marketing Strategy: From the Origin of the Concept to the Development of a Conceptual Framework." Journal of Historical Research in Marketing, vol. 4, no. 1, pp. 30–55. Siguaw, JA & Enz, CA 1999, “Best Practices in Hotel Operations”, Cornell Hotel and Restaurant Administration Quarterly, vol. 40, no. 6, pp. 42-53. Thareja P. (2007). A Total Quality Organisation thru ‘People Each One is Capable. Viewed 14 October, http://www.foundry-planet.com Bouyssou, D., Didier, D., Prade, H., & Marc, P. (2010) Decision Making Process: Concepts and Methods, New York: John Wiley & Sons. Read More