The case profiles Brad Handler, co-founder of Inspirato, as he contemplates and ultimately founds the luxury and leisure membership-based 'destination club,' shortly after selling and leaving an analogous company that he previously also founded (Exclusive Resorts). The case begins with a biographical overview of Brad Handler and the genesis of and logic for Exclusive Resorts. It provides an overview of the luxury vacation property industry, as well as the timeshare, fractional ownership and destination club industry and then dives into the Exclusive Resorts business model and company growth. After Handler decides to leave Exclusive Resorts, the case delves into his considerations and next steps as he evaluates the opportunity for an improved business model to that of Exclusive Resorts. Given Handler's unique understanding of the industry and a few of its inherent flaws (most notably capital intensity and seasonal demand), he recognizes the unique position he is in to improve upon the Exclusive Resorts model. In particular, the 'destination club' sector had previously been characterized by property acquisition and ownership-with significant capital requirements-as well as demand choppiness and supply constraints during weeks of high vacation interest. Handler considers the implications of entering into long-term leases and rental agreements with individuals and third-party vacation home owners, as well as the use of fluctuating "use rates" for each property in the 'destination club' portfolio in an attempt to both reduce the financial hurdles of entering a 'destination club' and to smooth internal demand. The case brings up a number of important considerations, including new venture formation, how and when an entrepreneur should think about a follow-up to a previous venture-especially one with similarities to a previous business and with customer overlap-business model design, and product launch. The case ends with Handler, having committed to the business and finalizing the product launch, considering how best to market the concept he is about to release publicly.
Swot Analysis of "Inspirato" written by Justin Randolph, George Foster includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Handler Resorts facing as an external strategic factors. Some of the topics covered in Inspirato case study are - Strategic Management Strategies, Entrepreneurship and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Inspirato casestudy better are - – technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, there is increasing trade war between United States & China, increasing energy prices, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels,
increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Inspirato case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Handler Resorts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Handler Resorts 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 Inspirato can be done for the following purposes –
1. Strategic planning using facts provided in Inspirato case study
2. Improving business portfolio management of Handler Resorts
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Handler Resorts
Strengths Inspirato | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Handler Resorts in Inspirato Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Handler Resorts in the sector have low bargaining power. Inspirato has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Handler Resorts to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Inspirato firm has clearly differentiated products in the market place. This has enabled Handler Resorts to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Handler Resorts to invest into research and development (R&D) and innovation.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Handler Resorts digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Handler Resorts 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 Innovation & Entrepreneurship field
– Handler Resorts 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 Handler Resorts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Handler Resorts 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 Handler Resorts is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Inspirato Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Handler Resorts
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Handler Resorts does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Handler Resorts 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.
Cross disciplinary teams
– Horizontal connected teams at the Handler Resorts 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.
High brand equity
– Handler Resorts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Handler Resorts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Handler Resorts is present in almost all the verticals within the industry. This has provided firm in Inspirato case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Operational resilience
– The operational resilience strategy in the Inspirato 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.
Effective Research and Development (R&D)
– Handler Resorts 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 Inspirato - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Inspirato | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Inspirato are -
Increasing silos among functional specialists
– The organizational structure of Handler Resorts is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Handler Resorts needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Handler Resorts to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Handler Resorts 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 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 Handler Resorts supply chain. Even after few cautionary changes mentioned in the HBR case study - Inspirato, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Handler Resorts vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Handler Resorts, firm in the HBR case study Inspirato needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Handler Resorts 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.
Skills based hiring
– The stress on hiring functional specialists at Handler Resorts 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.
No frontier risks strategy
– After analyzing the HBR case study Inspirato, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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 bargaining power of channel partners
– Because of the regulatory requirements, Justin Randolph, George Foster suggests that, Handler Resorts is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow decision making process
– As mentioned earlier in the report, Handler Resorts has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Handler Resorts even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Capital Spending Reduction
– Even during the low interest decade, Handler Resorts 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Handler Resorts is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Inspirato can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Inspirato | 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 Inspirato are -
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 Handler Resorts 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.
Building a culture of innovation
– managers at Handler Resorts 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 Innovation & Entrepreneurship segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Handler Resorts 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. Handler Resorts 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
– Handler Resorts can develop new processes and procedures in Innovation & Entrepreneurship 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 Handler Resorts has opened avenues for new revenue streams for the organization in the industry. This can help Handler Resorts to build a more holistic ecosystem as suggested in the Inspirato case study. Handler Resorts can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Handler Resorts in the consumer business. Now Handler Resorts can target international markets with far fewer capital restrictions requirements than the existing system.
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. Handler Resorts can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Handler Resorts can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Handler Resorts is facing challenges because of the dominance of functional experts in the organization. Inspirato 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 Handler Resorts 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 Handler Resorts to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Handler Resorts in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Buying journey improvements
– Handler Resorts can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Inspirato 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.
Manufacturing automation
– Handler Resorts can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Inspirato External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Inspirato are -
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Handler Resorts can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Handler Resorts 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.
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. Handler Resorts needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Inspirato, Handler Resorts may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
High dependence on third party suppliers
– Handler Resorts 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Handler Resorts in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Environmental challenges
– Handler Resorts 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. Handler Resorts can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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 Handler Resorts business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Handler Resorts is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Handler Resorts 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.
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
– Handler Resorts 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 Innovation & Entrepreneurship industry regulations.
Increasing wage structure of Handler Resorts
– 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 Handler Resorts.
Weighted SWOT Analysis of Inspirato 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 Inspirato 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 Inspirato 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 Inspirato 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 Inspirato 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 Handler Resorts needs to make to build a sustainable competitive advantage.