Shangri-La Hotels and Resorts: Achieving Service Leadership SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Shangri-La Hotels and Resorts: Achieving Service Leadership
Shangri-La Hotels and Resorts (SLA) owns and manages the largest deluxe chain in Asia. In 1993, the managing director recognized that there was a need to create a common goal and a set of common values to bind all Shangri-La Hotels and to instill among them the feeling that they were all part of the same organization. The "Shangri-La 2000" strategic plan was developed to achieve these objectives. This case provides a detailed account of the formulation process of "Shangri-La 2000" and how it was communicated to every employee at Kowloon Shangri-La (KSL)--one of the 38 Shangri-La Hotels. A major challenge faced by the general manager of KSL was how to interpret the performance measurements taken before and after the implementation of the strategic plan to assess its effectiveness. He also wondered what he could do to maintain the momentum of "Shangri-La 2000" at KSL amid the adverse operating environment brought about by the Asian economic crisis.
Swot Analysis of "Shangri-La Hotels and Resorts: Achieving Service Leadership" written by Gerard Tocquer, Eva Y.H. Kwan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shangri La facing as an external strategic factors. Some of the topics covered in Shangri-La Hotels and Resorts: Achieving Service Leadership case study are - Strategic Management Strategies, Organizational culture, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Shangri-La Hotels and Resorts: Achieving Service Leadership casestudy better are - – talent flight as more people leaving formal jobs, there is backlash against globalization, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices,
wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Shangri-La Hotels and Resorts: Achieving Service Leadership
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shangri-La Hotels and Resorts: Achieving Service Leadership case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shangri La, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shangri La 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 Shangri-La Hotels and Resorts: Achieving Service Leadership can be done for the following purposes –
1. Strategic planning using facts provided in Shangri-La Hotels and Resorts: Achieving Service Leadership case study
2. Improving business portfolio management of Shangri La
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 Shangri La
Strengths Shangri-La Hotels and Resorts: Achieving Service Leadership | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shangri La in Shangri-La Hotels and Resorts: Achieving Service Leadership Harvard Business Review case study are -
High switching costs
– The high switching costs that Shangri La 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.
Training and development
– Shangri La has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Shangri-La Hotels and Resorts: Achieving Service Leadership 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.
High brand equity
– Shangri La has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shangri La to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Shangri La 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 Shangri-La Hotels and Resorts: Achieving Service Leadership - 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 Technology & Operations field
– Shangri La 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 Shangri La in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Shangri La digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shangri La 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.
Innovation driven organization
– Shangri La is one of the most innovative firm in sector. Manager in Shangri-La Hotels and Resorts: Achieving Service Leadership Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Shangri La 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 Shangri La is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Shangri-La Hotels and Resorts: Achieving Service Leadership Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Shangri La
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Shangri La does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Shangri La in the sector have low bargaining power. Shangri-La Hotels and Resorts: Achieving Service Leadership has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shangri La to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Shangri La 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 Shangri-La Hotels and Resorts: Achieving Service Leadership HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Shangri La in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Shangri-La Hotels and Resorts: Achieving Service Leadership | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shangri-La Hotels and Resorts: Achieving Service Leadership are -
Increasing silos among functional specialists
– The organizational structure of Shangri La is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Shangri La needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shangri La to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Shangri La 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.
Skills based hiring
– The stress on hiring functional specialists at Shangri La has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shangri La is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Shangri-La Hotels and Resorts: Achieving Service Leadership can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Shangri-La Hotels and Resorts: Achieving Service Leadership, is just above the industry average. Shangri La 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.
Interest costs
– Compare to the competition, Shangri La 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shangri-La Hotels and Resorts: Achieving Service Leadership, it seems that the employees of Shangri La 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.
Products dominated business model
– Even though Shangri La 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 - Shangri-La Hotels and Resorts: Achieving Service Leadership should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Shangri La 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 star products
– The top 2 products and services of the firm as mentioned in the Shangri-La Hotels and Resorts: Achieving Service Leadership 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 Shangri La has relatively successful track record of launching new products.
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 Shangri La supply chain. Even after few cautionary changes mentioned in the HBR case study - Shangri-La Hotels and Resorts: Achieving Service Leadership, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shangri La vulnerable to further global disruptions in South East Asia.
Opportunities Shangri-La Hotels and Resorts: Achieving Service Leadership | 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 Shangri-La Hotels and Resorts: Achieving Service Leadership are -
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. Shangri La can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Shangri La 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shangri La can use these opportunities to build new business models that can help the communities that Shangri La operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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. Shangri La 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. Shangri La 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shangri La 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shangri La 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, Shangri-La Hotels and Resorts: Achieving Service Leadership, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Shangri La 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.
Developing new processes and practices
– Shangri La 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.
Creating value in data economy
– The success of analytics program of Shangri La has opened avenues for new revenue streams for the organization in the industry. This can help Shangri La to build a more holistic ecosystem as suggested in the Shangri-La Hotels and Resorts: Achieving Service Leadership case study. Shangri La can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shangri La 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 Shangri La to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Shangri La can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shangri-La Hotels and Resorts: Achieving Service Leadership 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.
Loyalty marketing
– Shangri La 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.
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 Shangri La in the consumer business. Now Shangri La can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Shangri-La Hotels and Resorts: Achieving Service Leadership External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shangri-La Hotels and Resorts: Achieving Service Leadership are -
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 Shangri La in the Technology & Operations sector and impact the bottomline of the organization.
Regulatory challenges
– Shangri La 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shangri La 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.
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. Shangri La can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Shangri La 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.
High dependence on third party suppliers
– Shangri La 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.
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 Shangri La business can come under increasing regulations regarding data privacy, data security, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shangri-La Hotels and Resorts: Achieving Service Leadership, Shangri La 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Shangri La with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Shangri La 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. Shangri La can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shangri La 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 Shangri-La Hotels and Resorts: Achieving Service Leadership .
Shortening product life cycle
– it is one of the major threat that Shangri La is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Shangri-La Hotels and Resorts: Achieving Service Leadership 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 Shangri-La Hotels and Resorts: Achieving Service Leadership 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 Shangri-La Hotels and Resorts: Achieving Service Leadership 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 Shangri-La Hotels and Resorts: Achieving Service Leadership 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 Shangri-La Hotels and Resorts: Achieving Service Leadership 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 Shangri La needs to make to build a sustainable competitive advantage.