Hotel Latvia: Sell Out, Hang Out or Partner? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Hotel Latvia: Sell Out, Hang Out or Partner?
Three friends have followed their entrepreneurial dream to build a five-star hotel in Liepaja, a seaside city in Latvia. After a few early profitable years, the hotel is struggling, due to the massive downturn in the Latvian economy as a result of the European Union financial crisis and slow recovery. The hotel has declined from generating an annual profit to now making a loss or barely breaking even. On several occasions, the co-owners have considered selling up while they can still break even. With the European Union showing signs of recovery, business confidence is returning and the future is starting to look up. The co-owners must decide whether to put all their struggles behind them, retain the ownership of the hotel and look forward to the potential days of profit that lie ahead. Alternatively, they can move in an almost opposite direction, by selling up and moving on. What strategic direction will produce a successful outcome? Stephen Grainger is affiliated with Edith Cowan University.
Swot Analysis of "Hotel Latvia: Sell Out, Hang Out or Partner?" written by Stephen Grainger includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hotel Latvia facing as an external strategic factors. Some of the topics covered in Hotel Latvia: Sell Out, Hang Out or Partner? case study are - Strategic Management Strategies, Operations management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Hotel Latvia: Sell Out, Hang Out or Partner? casestudy better are - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, technology disruption, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%,
increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Hotel Latvia: Sell Out, Hang Out or Partner?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hotel Latvia: Sell Out, Hang Out or Partner? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hotel Latvia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hotel Latvia 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 Hotel Latvia: Sell Out, Hang Out or Partner? can be done for the following purposes –
1. Strategic planning using facts provided in Hotel Latvia: Sell Out, Hang Out or Partner? case study
2. Improving business portfolio management of Hotel Latvia
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 Hotel Latvia
Strengths Hotel Latvia: Sell Out, Hang Out or Partner? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hotel Latvia in Hotel Latvia: Sell Out, Hang Out or Partner? Harvard Business Review case study are -
Learning organization
- Hotel Latvia 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 Hotel Latvia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hotel Latvia: Sell Out, Hang Out or Partner? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Hotel Latvia has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hotel Latvia: Sell Out, Hang Out or Partner? 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 Hotel Latvia: Sell Out, Hang Out or Partner? 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.
Superior customer experience
– The customer experience strategy of Hotel Latvia in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Hotel Latvia 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 Hotel Latvia: Sell Out, Hang Out or Partner? - 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 Strategy & Execution field
– Hotel Latvia 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 Latvia in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Hotel Latvia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hotel Latvia 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 Latvia is one of the most innovative firm in sector. Manager in Hotel Latvia: Sell Out, Hang Out or Partner? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Hotel Latvia is present in almost all the verticals within the industry. This has provided firm in Hotel Latvia: Sell Out, Hang Out or Partner? 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Hotel Latvia digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hotel Latvia 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Hotel Latvia: Sell Out, Hang Out or Partner? firm has clearly differentiated products in the market place. This has enabled Hotel Latvia to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Hotel Latvia to invest into research and development (R&D) and innovation.
High brand equity
– Hotel Latvia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hotel Latvia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Hotel Latvia: Sell Out, Hang Out or Partner? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hotel Latvia: Sell Out, Hang Out or Partner? are -
Lack of clear differentiation of Hotel Latvia products
– To increase the profitability and margins on the products, Hotel Latvia needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Hotel Latvia 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 Hotel Latvia 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 - Hotel Latvia: Sell Out, Hang Out or Partner? should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Hotel Latvia 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 Latvia 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.
Need for greater diversity
– Hotel Latvia has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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 Latvia supply chain. Even after few cautionary changes mentioned in the HBR case study - Hotel Latvia: Sell Out, Hang Out or Partner?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hotel Latvia vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Hotel Latvia: Sell Out, Hang Out or Partner? HBR case study mentions - Hotel Latvia 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.
Aligning sales with marketing
– It come across in the case study Hotel Latvia: Sell Out, Hang Out or Partner? 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 Hotel Latvia: Sell Out, Hang Out or Partner? can leverage the sales team experience to cultivate customer relationships as Hotel Latvia is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Hotel Latvia: Sell Out, Hang Out or Partner? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Hotel Latvia 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Stephen Grainger suggests that, Hotel Latvia 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hotel Latvia: Sell Out, Hang Out or Partner?, in the dynamic environment Hotel Latvia has struggled to respond to the nimble upstart competition. Hotel Latvia has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Hotel Latvia: Sell Out, Hang Out or Partner? | 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 Hotel Latvia: Sell Out, Hang Out or Partner? are -
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 Latvia can use these opportunities to build new business models that can help the communities that Hotel Latvia operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Building a culture of innovation
– managers at Hotel Latvia 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 Strategy & Execution segment.
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. Hotel Latvia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Hotel Latvia can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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 Latvia in the consumer business. Now Hotel Latvia can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Hotel Latvia 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.
Creating value in data economy
– The success of analytics program of Hotel Latvia has opened avenues for new revenue streams for the organization in the industry. This can help Hotel Latvia to build a more holistic ecosystem as suggested in the Hotel Latvia: Sell Out, Hang Out or Partner? case study. Hotel Latvia can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hotel Latvia in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Buying journey improvements
– Hotel Latvia can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hotel Latvia: Sell Out, Hang Out or Partner? 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.
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 Latvia 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.
Using analytics as competitive advantage
– Hotel Latvia 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 Hotel Latvia: Sell Out, Hang Out or Partner? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hotel Latvia to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hotel Latvia is facing challenges because of the dominance of functional experts in the organization. Hotel Latvia: Sell Out, Hang Out or Partner? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Hotel Latvia can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Threats Hotel Latvia: Sell Out, Hang Out or Partner? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hotel Latvia: Sell Out, Hang Out or Partner? are -
Regulatory challenges
– Hotel Latvia 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.
Stagnating economy with rate increase
– Hotel Latvia 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.
Consumer confidence and its impact on Hotel Latvia demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Hotel Latvia in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Hotel Latvia 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.
Shortening product life cycle
– it is one of the major threat that Hotel Latvia is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hotel Latvia with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hotel Latvia 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.
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 Latvia 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hotel Latvia 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 Hotel Latvia: Sell Out, Hang Out or Partner? .
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 Latvia
– 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 Latvia.
Weighted SWOT Analysis of Hotel Latvia: Sell Out, Hang Out or Partner? 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 Hotel Latvia: Sell Out, Hang Out or Partner? 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 Hotel Latvia: Sell Out, Hang Out or Partner? 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 Hotel Latvia: Sell Out, Hang Out or Partner? 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 Hotel Latvia: Sell Out, Hang Out or Partner? 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 Latvia needs to make to build a sustainable competitive advantage.