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 - – talent flight as more people leaving formal jobs, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google,
technology disruption, competitive advantages are harder to sustain because of technology dispersion, 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 -
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.
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.
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.
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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry firm has clearly differentiated products in the market place. This has enabled Hotel Boutique to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Hotel Boutique to invest into research and development (R&D) and innovation.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Hotel Boutique 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.
Successful track record of launching new products
– Hotel Boutique has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hotel Boutique has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Highly skilled collaborators
– Hotel Boutique 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Hotel Boutique 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.
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 decision making process
– As mentioned earlier in the report, Hotel Boutique 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. Hotel Boutique 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.
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.
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.
Lack of clear differentiation of Hotel Boutique products
– To increase the profitability and margins on the products, Hotel Boutique needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Hotel Boutique supply chain. Even after few cautionary changes mentioned in the HBR case study - Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hotel Boutique vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Hotel Boutique 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.
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.
Aligning sales with marketing
– It come across in the case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry 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 Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry can leverage the sales team experience to cultivate customer relationships as Hotel Boutique is planning to shift buying processes online.
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.
High cash cycle compare to competitors
Hotel Boutique has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hotel Boutique 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, Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Hotel Boutique 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. Hotel Boutique 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 Hotel Boutique 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hotel Boutique can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Loyalty marketing
– Hotel Boutique 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.
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.
Manufacturing automation
– Hotel Boutique 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.
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.
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. Hotel Boutique can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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 -
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.
Increasing wage structure of Hotel Boutique
– 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 Hotel Boutique.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Hotel Boutique has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Hotel Boutique needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hotel Boutique with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Hotel Vertu: Analyzing the Opportunity in the Boutique Hotel Industry, Hotel Boutique 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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hotel Boutique 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.
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.