AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb
The hotel industry is being disrupted by new digital players who have entered the market and challenge the conventional hospitality approach. The sharing economy in particular, with the Airbnb start-up in the lead, has created a major challenge, if not a threat, to established hotel chains. As a response, AccorHotels, Europe's leading hotel group, is going through a major digital transformation that impacts its corporate culture, organizational structure, value proposition, and overall business model. The goal is to turn the traditional asset-heavy company into an active player in the new hospitality economy, able to compete head-on with the industry's digital disruptors. Learning objective: The case discusses the strategic response of industry incumbents to the challenges coming from digital disruptors. Participants will be asked to compare the two business models from different angles: how do the different approaches deliver on the consumer proposition, and which are the strengths and weaknesses of each business model. Participants will further be asked to assess the strategic options of an asset-heavy incumbent to react to asset-light competitors in a context of digital disruption. The case serves as a basis to discuss the opportunities and challenges of industry incumbents to transform themselves and better compete in an increasingly digital business environment.
Swot Analysis of "AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb" written by Tawfik Jelassi, Valerie Keller-Birrer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Digital Accorhotels facing as an external strategic factors. Some of the topics covered in AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb case study are - Strategic Management Strategies, Disruptive innovation, Economy, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, there is backlash against globalization, central banks are concerned over increasing inflation, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models,
there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Digital Accorhotels, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Digital Accorhotels 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb can be done for the following purposes –
1. Strategic planning using facts provided in AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb case study
2. Improving business portfolio management of Digital Accorhotels
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 Digital Accorhotels
Strengths AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Digital Accorhotels in AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 Digital Accorhotels in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Digital Accorhotels is one of the leading recruiters in the industry. Managers in the AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb firm has clearly differentiated products in the market place. This has enabled Digital Accorhotels to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Digital Accorhotels to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Digital Accorhotels 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 Digital Accorhotels 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 Digital Accorhotels 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.
Effective Research and Development (R&D)
– Digital Accorhotels 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Digital Accorhotels 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.
Learning organization
- Digital Accorhotels 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 Digital Accorhotels is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Digital Accorhotels 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Digital Accorhotels is one of the most innovative firm in sector. Manager in AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Digital Accorhotels is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb are -
High operating costs
– Compare to the competitors, firm in the HBR case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 Digital Accorhotels 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb, in the dynamic environment Digital Accorhotels has struggled to respond to the nimble upstart competition. Digital Accorhotels has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb, is just above the industry average. Digital Accorhotels 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.
Aligning sales with marketing
– It come across in the case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb can leverage the sales team experience to cultivate customer relationships as Digital Accorhotels is planning to shift buying processes online.
Interest costs
– Compare to the competition, Digital Accorhotels 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb, it seems that the employees of Digital Accorhotels 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Digital Accorhotels is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Digital Accorhotels supply chain. Even after few cautionary changes mentioned in the HBR case study - AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Digital Accorhotels vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 Digital Accorhotels has relatively successful track record of launching new products.
Products dominated business model
– Even though Digital Accorhotels 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 - AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb should strive to include more intangible value offerings along with its core products and services.
Opportunities AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb | 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb are -
Learning at scale
– Online learning technologies has now opened space for Digital Accorhotels 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Digital Accorhotels can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Digital Accorhotels can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Digital Accorhotels 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. Digital Accorhotels 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.
Developing new processes and practices
– Digital Accorhotels 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Digital Accorhotels can use these opportunities to build new business models that can help the communities that Digital Accorhotels operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Leveraging digital technologies
– Digital Accorhotels 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Digital Accorhotels 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.
Building a culture of innovation
– managers at Digital Accorhotels 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.
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 Digital Accorhotels 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.
Loyalty marketing
– Digital Accorhotels 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 Digital Accorhotels in the consumer business. Now Digital Accorhotels can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Digital Accorhotels can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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.
Shortening product life cycle
– it is one of the major threat that Digital Accorhotels is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Digital Accorhotels business can come under increasing regulations regarding data privacy, data security, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb, Digital Accorhotels may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Digital Accorhotels needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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. Digital Accorhotels 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.
Regulatory challenges
– Digital Accorhotels 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.
Environmental challenges
– Digital Accorhotels 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. Digital Accorhotels can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Digital Accorhotels 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb .
Technology acceleration in Forth Industrial Revolution
– Digital Accorhotels has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Digital Accorhotels needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing wage structure of Digital Accorhotels
– 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 Digital Accorhotels.
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 Digital Accorhotels in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 AccorHotels' Digital Transformation: A Response to Hospitality Disruptor Airbnb 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 Digital Accorhotels needs to make to build a sustainable competitive advantage.
