Case Study Description of GuestFirst Hotel (A): Customer Loyalty
Used as part of the third module of a course on Managing Service Operations, which addresses how managers can inform their decisions with customer data (606-097).Provides a hotel context in which to explore the link between customer loyalty and financial performance, using four years of hotel data. Challenges students to find the extent of the relationship between loyalty and performance.
Swot Analysis of "GuestFirst Hotel (A): Customer Loyalty" written by Frances X. Frei, Dennis Campbell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Loyalty Hotel facing as an external strategic factors. Some of the topics covered in GuestFirst Hotel (A): Customer Loyalty case study are - Strategic Management Strategies, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the GuestFirst Hotel (A): Customer Loyalty casestudy better are - – technology disruption, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, there is increasing trade war between United States & China, there is backlash against globalization, cloud computing is disrupting traditional business models,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of GuestFirst Hotel (A): Customer Loyalty
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GuestFirst Hotel (A): Customer Loyalty case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Loyalty Hotel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Loyalty Hotel 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 GuestFirst Hotel (A): Customer Loyalty can be done for the following purposes –
1. Strategic planning using facts provided in GuestFirst Hotel (A): Customer Loyalty case study
2. Improving business portfolio management of Loyalty Hotel
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Loyalty Hotel
Strengths GuestFirst Hotel (A): Customer Loyalty | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Loyalty Hotel in GuestFirst Hotel (A): Customer Loyalty Harvard Business Review case study are -
Learning organization
- Loyalty Hotel 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 Loyalty Hotel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in GuestFirst Hotel (A): Customer Loyalty Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Loyalty Hotel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Loyalty Hotel 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.
Successful track record of launching new products
– Loyalty Hotel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Loyalty Hotel 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.
Superior customer experience
– The customer experience strategy of Loyalty Hotel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Loyalty Hotel 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.
Ability to lead change in Technology & Operations field
– Loyalty Hotel 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 Loyalty Hotel in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Loyalty Hotel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Loyalty Hotel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Loyalty Hotel is one of the most innovative firm in sector. Manager in GuestFirst Hotel (A): Customer Loyalty Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Loyalty Hotel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Loyalty Hotel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Loyalty Hotel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Loyalty Hotel 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 Frances X. Frei, Dennis Campbell 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.
Ability to recruit top talent
– Loyalty Hotel is one of the leading recruiters in the industry. Managers in the GuestFirst Hotel (A): Customer Loyalty are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses GuestFirst Hotel (A): Customer Loyalty | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GuestFirst Hotel (A): Customer Loyalty are -
Capital Spending Reduction
– Even during the low interest decade, Loyalty Hotel 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.
Low market penetration in new markets
– Outside its home market of Loyalty Hotel, firm in the HBR case study GuestFirst Hotel (A): Customer Loyalty needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study GuestFirst Hotel (A): Customer Loyalty, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Increasing silos among functional specialists
– The organizational structure of Loyalty Hotel is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Loyalty Hotel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Loyalty Hotel to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study GuestFirst Hotel (A): Customer Loyalty 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 GuestFirst Hotel (A): Customer Loyalty can leverage the sales team experience to cultivate customer relationships as Loyalty Hotel is planning to shift buying processes online.
Interest costs
– Compare to the competition, Loyalty Hotel 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.
High cash cycle compare to competitors
Loyalty Hotel 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study GuestFirst Hotel (A): Customer Loyalty, in the dynamic environment Loyalty Hotel has struggled to respond to the nimble upstart competition. Loyalty Hotel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the GuestFirst Hotel (A): Customer Loyalty 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 Loyalty Hotel has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study GuestFirst Hotel (A): Customer Loyalty 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 Loyalty Hotel 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study GuestFirst Hotel (A): Customer Loyalty, it seems that the employees of Loyalty Hotel 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.
Opportunities GuestFirst Hotel (A): Customer Loyalty | 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 GuestFirst Hotel (A): Customer Loyalty are -
Better consumer reach
– The expansion of the 5G network will help Loyalty Hotel to increase its market reach. Loyalty Hotel 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, Loyalty Hotel can use these opportunities to build new business models that can help the communities that Loyalty Hotel operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Loyalty marketing
– Loyalty Hotel 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.
Manufacturing automation
– Loyalty Hotel can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Loyalty Hotel is facing challenges because of the dominance of functional experts in the organization. GuestFirst Hotel (A): Customer Loyalty 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.
Leveraging digital technologies
– Loyalty Hotel 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Loyalty Hotel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Loyalty Hotel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Loyalty Hotel in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Buying journey improvements
– Loyalty Hotel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. GuestFirst Hotel (A): Customer Loyalty 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Loyalty Hotel can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Loyalty Hotel can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Loyalty Hotel has opened avenues for new revenue streams for the organization in the industry. This can help Loyalty Hotel to build a more holistic ecosystem as suggested in the GuestFirst Hotel (A): Customer Loyalty case study. Loyalty Hotel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Loyalty Hotel 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 GuestFirst Hotel (A): Customer Loyalty - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Loyalty Hotel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats GuestFirst Hotel (A): Customer Loyalty External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GuestFirst Hotel (A): Customer Loyalty are -
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.
Technology acceleration in Forth Industrial Revolution
– Loyalty Hotel has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Loyalty Hotel needs to keep up with the evolution of technology in the Technology & Operations 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Loyalty Hotel.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Loyalty Hotel 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 GuestFirst Hotel (A): Customer Loyalty .
Regulatory challenges
– Loyalty Hotel 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 Technology & Operations industry regulations.
Stagnating economy with rate increase
– Loyalty Hotel 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.
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 Loyalty Hotel in the Technology & Operations sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study GuestFirst Hotel (A): Customer Loyalty, Loyalty Hotel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Shortening product life cycle
– it is one of the major threat that Loyalty Hotel is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Loyalty Hotel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Loyalty Hotel 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.
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. Loyalty Hotel 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.
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.
Weighted SWOT Analysis of GuestFirst Hotel (A): Customer Loyalty 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 GuestFirst Hotel (A): Customer Loyalty 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 GuestFirst Hotel (A): Customer Loyalty 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 GuestFirst Hotel (A): Customer Loyalty 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 GuestFirst Hotel (A): Customer Loyalty 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 Loyalty Hotel needs to make to build a sustainable competitive advantage.