Case Study Description of Hilton Hotels: Brand Differentiation through Customer Relationship Management
This case analyzes the Hilton Hotels Corporation's CRM strategy at a key juncture in its history, immediately after the firm has been taken private by Blackstone. The case provides students with a comprehensive history of the evolution and IT enablers of Hilton's CRM Initiative, as well as the proprietary OnQ enterprise system. The case thus offers a rare opportunity to engage in a longitudinal evaluation of the firm's CRM initiative, and to enable students to propose the future evolution of the initiative based on their analysis.
Authors :: Lynda M. Applegate, Gabriele Piccoli, Chekitan S. Dev
Swot Analysis of "Hilton Hotels: Brand Differentiation through Customer Relationship Management" written by Lynda M. Applegate, Gabriele Piccoli, Chekitan S. Dev includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Crm Hilton facing as an external strategic factors. Some of the topics covered in Hilton Hotels: Brand Differentiation through Customer Relationship Management case study are - Strategic Management Strategies, IT and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Hilton Hotels: Brand Differentiation through Customer Relationship Management casestudy better are - – supply chains are disrupted by pandemic , technology disruption, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, wage bills are increasing, increasing transportation and logistics costs,
digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Hilton Hotels: Brand Differentiation through Customer Relationship Management
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hilton Hotels: Brand Differentiation through Customer Relationship Management case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Crm Hilton, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Crm Hilton 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management can be done for the following purposes –
1. Strategic planning using facts provided in Hilton Hotels: Brand Differentiation through Customer Relationship Management case study
2. Improving business portfolio management of Crm Hilton
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Crm Hilton
Strengths Hilton Hotels: Brand Differentiation through Customer Relationship Management | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Crm Hilton in Hilton Hotels: Brand Differentiation through Customer Relationship Management Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Hilton Hotels: Brand Differentiation through Customer Relationship Management firm has clearly differentiated products in the market place. This has enabled Crm Hilton to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Crm Hilton to invest into research and development (R&D) and innovation.
Learning organization
- Crm Hilton is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Crm Hilton is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hilton Hotels: Brand Differentiation through Customer Relationship Management Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Crm Hilton 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Crm Hilton is one of the most innovative firm in sector. Manager in Hilton Hotels: Brand Differentiation through Customer Relationship Management Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Crm Hilton
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Crm Hilton does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Crm Hilton has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Crm Hilton to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Crm Hilton 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.
Low bargaining power of suppliers
– Suppliers of Crm Hilton in the sector have low bargaining power. Hilton Hotels: Brand Differentiation through Customer Relationship Management has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Crm Hilton to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Crm Hilton are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Crm Hilton has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hilton Hotels: Brand Differentiation through Customer Relationship Management Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Hilton Hotels: Brand Differentiation through Customer Relationship Management Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Crm Hilton digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Crm Hilton has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Hilton Hotels: Brand Differentiation through Customer Relationship Management | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hilton Hotels: Brand Differentiation through Customer Relationship Management are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Hilton Hotels: Brand Differentiation through Customer Relationship Management HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Crm Hilton has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Crm Hilton 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. Crm Hilton 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Hilton Hotels: Brand Differentiation through Customer Relationship Management, it seems that the employees of Crm Hilton don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Hilton Hotels: Brand Differentiation through Customer Relationship Management 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management can leverage the sales team experience to cultivate customer relationships as Crm Hilton is planning to shift buying processes online.
High cash cycle compare to competitors
Crm Hilton has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Crm Hilton products
– To increase the profitability and margins on the products, Crm Hilton needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hilton Hotels: Brand Differentiation through Customer Relationship Management, is just above the industry average. Crm Hilton needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Crm Hilton 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.
Products dominated business model
– Even though Crm Hilton has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Hilton Hotels: Brand Differentiation through Customer Relationship Management should strive to include more intangible value offerings along with its core products and services.
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 Crm Hilton supply chain. Even after few cautionary changes mentioned in the HBR case study - Hilton Hotels: Brand Differentiation through Customer Relationship Management, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Crm Hilton vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Lynda M. Applegate, Gabriele Piccoli, Chekitan S. Dev suggests that, Crm Hilton 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management | 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management are -
Using analytics as competitive advantage
– Crm Hilton 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Crm Hilton to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Crm Hilton 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.
Buying journey improvements
– Crm Hilton can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hilton Hotels: Brand Differentiation through Customer Relationship Management suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 Crm Hilton in the consumer business. Now Crm Hilton can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Crm Hilton 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Crm Hilton can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Hilton Hotels: Brand Differentiation through Customer Relationship Management, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Crm Hilton can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Crm Hilton 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 Crm Hilton to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Crm Hilton can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Crm Hilton can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Crm Hilton to increase its market reach. Crm Hilton 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Crm Hilton can use these opportunities to build new business models that can help the communities that Crm Hilton operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Crm Hilton 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.
Threats Hilton Hotels: Brand Differentiation through Customer Relationship Management External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hilton Hotels: Brand Differentiation through Customer Relationship Management are -
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.
Regulatory challenges
– Crm Hilton 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 Strategy & Execution industry regulations.
Increasing wage structure of Crm Hilton
– 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 Crm Hilton.
Technology acceleration in Forth Industrial Revolution
– Crm Hilton has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Crm Hilton needs to keep up with the evolution of technology in the Strategy & Execution 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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Crm Hilton can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Crm Hilton 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.
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. Crm Hilton needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Crm Hilton 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Crm Hilton 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. Crm Hilton can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Crm Hilton with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Crm Hilton 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Crm Hilton in the Strategy & Execution industry. The Strategy & Execution 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.
Weighted SWOT Analysis of Hilton Hotels: Brand Differentiation through Customer Relationship Management 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management 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 Hilton Hotels: Brand Differentiation through Customer Relationship Management 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 Crm Hilton needs to make to build a sustainable competitive advantage.
