Hospitality Strategic Management - Case Study Example

Hospitality strategic management Case 7: The Commoditization of Starbucks Question Commoditization is a process inbusiness by which goods and services with high economic value become simple commodities. It often portrays a decline in the value of the products and services. The case at Starbucks is different. The company’s products are still valuable and the company can prevent the commoditization of its products by developing sustainable business models. The company still enjoys a substantial market share with its products and services enjoying the quality they did in the past. The rising competition requires effective management. Starbucks must develop competitive products that uphold the quality standards of the company. With quality and diversity as its competitive advantage, Starbucks may retain the market share thus prevent the commoditization of its products. Question 2: McDonald is indeed a real competition for Starbucks coffee. McDonald has grown the number of its outlet rapidly within the past few years and the company’s image continues to conflict with that of Starbucks. As such, Starbucks must employ appropriate strategies in order to beat the competition. Key among such is differentiation, which encourages the company to continue producing the best quality coffee and guarantee the customer experience. Starbucks once prided itself in the above qualities. The two are effective and sustainable strategies that would safeguard the company’s future in the market. Furthermore, Starbucks has a superior brand name. The company therefore should therefore retain the quality of its products and employ appropriate leadership in order to oversee aggressive marketing and operation as it increases its market share by increasing both its outlets and diversifying its products. Question 3: The decision to fire the chief executive officer, Jim Donald was wise. The company required an appropriate management that would motivate the employees thereby influence the change required in order to sustain the profitability of the company despite the rising competition. Changing top-level management has a number of advantages key among which it results in operational change. Such is the surest way of taking an organization through change. The new manager would initiate the changes by restructuring human resource management and branding among other appropriate activities necessary to sustain the company’s profitability. However, the process always disrupts the operations of a company as the employees must adopt the new policies and accept the new managers (Enz 32). Some employees may resist such changes thus slowing productivity. Question 4: Starbucks has not lost its competitive advantage. As explained earlier, the company enjoys a strong brand name. This implies that the company has a competitive advantage over the new brands. Starbucks must therefore strive to sustain its competitive advantage. The key strategies to doing this are to safeguard the quality of its products, work on image control and international expansion. Safeguarding the quality of the product ensures that the brand lives up to its name thereby retaining the company’s image international expansion on the other hand will ensure that the company beats the competition in oversea markets. The company can achieve this since it enjoys financial stability. Question 5: International expansion offers Starbucks the greatest opportunity. The company should therefore concentrate on growing its international market share by creating strategic outlets in various countries before its competitors realize their opportunity in the same market. International expansion should be the company’s strategy for growth. In light of the failing US performances, the company should concentrate in revitalizing its operations in the United States by identifying the problem as a single problem with the capacity to affect its international expansion. As such, Starbucks should revive its operations in the United States and position its products and services favorably once again since the United States is among the company’s greatest markets (Olsen and Zhao 101). The company must integrate international expansion into its operational strategies in order to achieve its desired profitability and longevity. As explained earlier, financial stability is key among the company’s strengths. The company can therefore implement its international expansion plan while strategizing its operation in the US. Case 1: The Fun Ship Experience at Carnival Cruise Lines Question 1: Consolidated industries such as the cruise industry are less competitive than the fragmented industries. In consolidated industry, every company knows the strengths and weaknesses of the other. Furthermore, the companies in such an industry operate holistically with each company occupying a particular holiday destination. This makes their operations ordered thus less competitive. Fragmented industries on the other hand have numerous players each striving to win a substantial market share. The companies therefore employ aggressive marketing strategies, a feature that intensifies the competition in such industries. It becomes easier for a company to become a monopoly in a consolidated market than they would in a fragmented market. This shows the complex and competitive nature of fragmented industries. Question 2: The structure of the cruise industry resembles a monopoly. Carnival Corporation for example monopolizes the market. The company enjoys more than 44% of the market share. Such is a substantial share of the market the company manages to retain owing to the uniqueness of the industry. The company was the innovator of the service. Such is a basic factor that enhanced its rapid success (Perrey and Dennis 76). Currently, the company has more than eighty ships operating in various parts of the world. This implies that the company’s ships control the entire market. Another fundamental factor that makes the industry a monopoly is the fact that a ship operates as a one-stop market place. The company makes its profits from the sale of tickets and other on board sources of revenue such as casinos and bars among others. The customers cannot access such services from elsewhere once they are on board thus forcing them to purchase them from the company. Question 3: Carnival Cruise Inc. prides itself in offering an all-inclusive cruise vacation to its esteemed customers. This implies that the various brands operating on the company’s ships have synergies. The synergy arises from the fact that the company coordinates every aspect of the business ranging from the cruise to the other auxiliary services (Enz 76). By making every ship a one-stop shop, the company intensifies its profitability by ensuring that every product and brand belongs to the company. By creating its own services and products, the company succeeds developing a holistic brand, one that has synergy in the quality and diversity of every product and service. Question 5: The existing customer information must always influence product and service creation thus the development of a brand. Key among such is the advanced age of the company’s customers. More than 65% of the company’s customers are above the age of 45. Such a segment of the population has adequate financial resources and therefore requires high quality products and services commensurate to the money they are always willing to pay (Hutt and Thomas 22). Diversity of both services and products is always a profitable marketing strategy. In doing this, Carnival Cruise Inc. should develop a brand that offers the quality that satisfies the demands of the market. Question 6: Carnival Cruise Inc. strives to maintain its market leadership position. As such, its key objective is to develop new cruise segments and innovate cruise packages in order to attract more customers. Such is a hectic process that requires the company to change existing perceptions about the brand. The company has the capacity to do this given the fact that it invests in both print and broadcast media in advertising. Additionally, the company has direct influence on its customers especially those who have boarded its ships. The company can do this by developing new, innovative and high quality products capable of swaying the customers appropriately. Works cited Enz, Cathy A. Hospitality Strategic Management: Concepts and Cases. Hoboken, N.J: John Wiley & Sons, 2010. Print. https://books.google.co.ke/books?id=x77o93fmiKQC&pg=PA564&lpg=PA564&dq=the+commoditization+of+starbucks+case+study&source=bl&ots=ws_xOeC5mB&sig=1r4VU9oN3Or7OEMm9belfWEPLIY&hl=en&sa=X&ei=EXzhVLy_FuHMygP0lIKYBw&redir_esc=y#v=onepage&q=the%20commoditization%20of%20starbucks%20case%20study&f=false Hutt, Michael D, and Thomas W. Speh. Business Marketing Management: B2b. Australia: South-Western, Cengage Learning, 2013. Print. https://books.google.co.ke/books?id=8lMAWJXtf6QC&printsec=frontcover&dq=marketing+management&hl=en&sa=X&ei=lZfhVMHADKiu7AasoICYAg&sqi=2&redir_esc=y#v=onepage&q=marketing%20management&f=false Olsen, Michae and Zhao, Jinlin. Handbook of Hospitality Strategic Management. New York: Routledge, 2008. Print. https://books.google.co.ke/books?id=OtAsBgAAQBAJ&pg=PA36&dq=Hospitality+strategic+management&hl=en&sa=X&ei=35fhVIuPKcj_UrKlgOAI&ved=0CDwQ6AEwAw#v=onepage&q=Hospitality%20strategic%20management&f=false Perrey, Jesko, and Dennis, Spillecke. Retail Marketing and Branding: A Definitive Guide to Maximizing Roi. Chichester: Wiley, 2013. Internet resource. https://books.google.co.ke/books?id=Kcpr5w1jNTcC&pg=PT23&dq=the+commoditization+of+starbucks+case+study&hl=en&sa=X&ei=QJfhVKqzDYGqUM-RhLgC&redir_esc=y#v=onepage&q=the%20commoditization%20of%20starbucks%20case%20study&f=false Read More