Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry
Two soon-to-be MBA graduates are considering a business opportunity in the boutique hotel industry. Having found a seemingly attractive property in Savannah, Georgia, Yvonne D'Arcy and Elisabeth Whiting face questions about career issues, planning, financing, and the possibility of unequal power dynamics. Students assess the merits of the proposed project, as well as the overall attractiveness of the boutique hotel industry and the career opportunity it presents. Exhibits include a Letter of Agreement between D'Arcy and Whiting, the hotel's historical performance data, lodging statistics for the Savannah market, and the project budget. An associated case, "Hotel Vertu: Financing the Venture in the Boutique Hotel Industry" (#917505), overlaps with this case, but delves into the issues around financial forecasts, financial returns, deal structure, equity splits, and the power dynamic between investors and entrepreneurs. Although each case can be taught on its own (i.e., students do not require data or knowledge from one case in order to benefit fully from the other), the two can be paired in order to give students a more complete sense of the challenges that aspiring entrepreneurs may face. If both cases are taught, it is recommended that instructors begin with "Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry."
Authors :: Howard H. Stevenson, Michael J. Roberts
Swot Analysis of "Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry" written by Howard H. Stevenson, Michael J. Roberts includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hotel Boutique facing as an external strategic factors. Some of the topics covered in Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry case study are - Strategic Management Strategies, Entrepreneurship, Joint ventures, Negotiations, Strategic planning and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry casestudy better are - – central banks are concerned over increasing inflation, increasing energy prices, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hotel Boutique, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hotel Boutique 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry can be done for the following purposes –
1. Strategic planning using facts provided in Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry case study
2. Improving business portfolio management of Hotel Boutique
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 Hotel Boutique
Strengths Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hotel Boutique in Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry Harvard Business Review case study are -
High brand equity
– Hotel Boutique has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hotel Boutique to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Innovation & Entrepreneurship field
– Hotel Boutique 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 Hotel Boutique in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Hotel Boutique 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 Hotel Boutique is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Hotel Boutique digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hotel Boutique 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.
Analytics focus
– Hotel Boutique is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Howard H. Stevenson, Michael J. Roberts can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Hotel Boutique is one of the leading recruiters in the industry. Managers in the Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Hotel Boutique is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Hotel Boutique in the sector have low bargaining power. Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hotel Boutique to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Hotel Boutique has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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.
Superior customer experience
– The customer experience strategy of Hotel Boutique in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Hotel Boutique 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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.
Weaknesses Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry are -
Slow to strategic competitive environment developments
– As Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry HBR case study mentions - Hotel Boutique takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Interest costs
– Compare to the competition, Hotel Boutique 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry, is just above the industry average. Hotel Boutique 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry, in the dynamic environment Hotel Boutique has struggled to respond to the nimble upstart competition. Hotel Boutique has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Boutique has relatively successful track record of launching new products.
Need for greater diversity
– Hotel Boutique 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Hotel Boutique 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Howard H. Stevenson, Michael J. Roberts suggests that, Hotel Boutique 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hotel Boutique is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Hotel Boutique is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Hotel Boutique needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hotel Boutique to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Hotel Boutique, firm in the HBR case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry | 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry are -
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 Hotel Boutique in the consumer business. Now Hotel Boutique can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Hotel Boutique has opened avenues for new revenue streams for the organization in the industry. This can help Hotel Boutique to build a more holistic ecosystem as suggested in the Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry case study. Hotel Boutique can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Hotel Boutique 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.
Buying journey improvements
– Hotel Boutique can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hotel Boutique is facing challenges because of the dominance of functional experts in the organization. Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Boutique 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 Hotel Boutique to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Hotel Boutique 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hotel Boutique 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 Hotel Boutique 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hotel Boutique 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.
Leveraging digital technologies
– Hotel Boutique 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, Hotel Boutique can use these opportunities to build new business models that can help the communities that Hotel Boutique operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Better consumer reach
– The expansion of the 5G network will help Hotel Boutique to increase its market reach. Hotel Boutique 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.
Building a culture of innovation
– managers at Hotel Boutique 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.
Threats Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Boutique in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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.
Consumer confidence and its impact on Hotel Boutique 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.
Regulatory challenges
– Hotel Boutique 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hotel Boutique 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry .
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 Hotel Boutique.
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. Hotel Boutique 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.
High dependence on third party suppliers
– Hotel Boutique 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.
Stagnating economy with rate increase
– Hotel Boutique 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.
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 Hotel Boutique business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Hotel Boutique 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. Hotel Boutique can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Hotel Boutique needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Boutique needs to make to build a sustainable competitive advantage.