Case Study Description of Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects
Phuket Beach Hotel has an opportunity to lease its underutilized space to a karaoke pub and earn a rental income. Alternatively, the hotel could develop the unused space and create its own pub. The general manager of the hotel must decide which of the two capital projects to recommend to the hotel owners. This case presents sufficient information to build cash flow forecasts for each project and to rank the mutually exclusive projects using various evaluation criteria.
Swot Analysis of "Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects" written by Su Han Chan, Ko Wang, Mary Ho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hotel Phuket facing as an external strategic factors. Some of the topics covered in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects casestudy better are - – central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hotel Phuket, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hotel Phuket operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects can be done for the following purposes –
1. Strategic planning using facts provided in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects case study
2. Improving business portfolio management of Hotel Phuket
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hotel Phuket
Strengths Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hotel Phuket in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects Harvard Business Review case study are -
Highly skilled collaborators
– Hotel Phuket has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Hotel Phuket is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Su Han Chan, Ko Wang, Mary Ho can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Hotel Phuket
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hotel Phuket does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Hotel Phuket has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Finance & Accounting field
– Hotel Phuket is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Hotel Phuket in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Hotel Phuket is one of the leading recruiters in the industry. Managers in the Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Hotel Phuket has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hotel Phuket to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Hotel Phuket is present in almost all the verticals within the industry. This has provided firm in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Hotel Phuket has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hotel Phuket has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Hotel Phuket is one of the most innovative firm in sector. Manager in Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Hotel Phuket in the sector have low bargaining power. Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hotel Phuket to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Hotel Phuket has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects are -
No frontier risks strategy
– After analyzing the HBR case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects, in the dynamic environment Hotel Phuket has struggled to respond to the nimble upstart competition. Hotel Phuket has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Hotel Phuket has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Hotel Phuket has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Hotel Phuket even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects HBR case study mentions - Hotel Phuket takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Hotel Phuket has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Hotel Phuket is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Hotel Phuket needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hotel Phuket to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hotel Phuket is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Hotel Phuket supply chain. Even after few cautionary changes mentioned in the HBR case study - Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hotel Phuket vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects can leverage the sales team experience to cultivate customer relationships as Hotel Phuket is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Su Han Chan, Ko Wang, Mary Ho suggests that, Hotel Phuket is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hotel Phuket to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Hotel Phuket to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Hotel Phuket to increase its market reach. Hotel Phuket will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Manufacturing automation
– Hotel Phuket can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hotel Phuket in the consumer business. Now Hotel Phuket can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Hotel Phuket to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Hotel Phuket to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hotel Phuket can use these opportunities to build new business models that can help the communities that Hotel Phuket operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hotel Phuket can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Building a culture of innovation
– managers at Hotel Phuket can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Hotel Phuket can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hotel Phuket can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Hotel Phuket has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hotel Phuket to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Hotel Phuket has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects are -
High dependence on third party suppliers
– Hotel Phuket high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hotel Phuket in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Hotel Phuket business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Hotel Phuket needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Hotel Phuket can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Hotel Phuket
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Hotel Phuket.
Stagnating economy with rate increase
– Hotel Phuket can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hotel Phuket can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects .
Technology acceleration in Forth Industrial Revolution
– Hotel Phuket has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Hotel Phuket needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Hotel Phuket needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Hotel Phuket needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Hotel Phuket will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Hotel Phuket is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Hotel Phuket needs to make to build a sustainable competitive advantage.
