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 - – there is backlash against globalization, increasing energy prices, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, central banks are concerned over increasing inflation,
competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, 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 -
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.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Loyalty Hotel 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.
Low bargaining power of suppliers
– Suppliers of Loyalty Hotel in the sector have low bargaining power. GuestFirst Hotel (A): Customer Loyalty has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Loyalty Hotel to manage not only supply disruptions but also source products at highly competitive prices.
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.
Training and development
– Loyalty Hotel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in GuestFirst Hotel (A): Customer Loyalty 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.
Highly skilled collaborators
– Loyalty Hotel 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 GuestFirst Hotel (A): Customer Loyalty HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Loyalty Hotel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study GuestFirst Hotel (A): Customer Loyalty can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Products dominated business model
– Even though Loyalty Hotel 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 - GuestFirst Hotel (A): Customer Loyalty should strive to include more intangible value offerings along with its core products and services.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study GuestFirst Hotel (A): Customer Loyalty, is just above the industry average. Loyalty Hotel 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Loyalty Hotel needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
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.
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.
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 Loyalty Hotel supply chain. Even after few cautionary changes mentioned in the HBR case study - GuestFirst Hotel (A): Customer Loyalty, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Loyalty Hotel vulnerable to further global disruptions in South East Asia.
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.
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.
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.
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.
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.
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.
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.
Developing new processes and practices
– Loyalty Hotel can develop new processes and procedures in Technology & Operations 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.
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.
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 Loyalty Hotel 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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Loyalty Hotel 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 Loyalty Hotel to hire the very best people irrespective of their geographical location.
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.
Learning at scale
– Online learning technologies has now opened space for Loyalty Hotel 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.
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 -
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
– 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.
Increasing wage structure of Loyalty Hotel
– 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 Loyalty Hotel.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Loyalty Hotel in the Technology & Operations industry. The Technology & Operations 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.
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 .
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 Loyalty Hotel business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Loyalty Hotel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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.
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.
