Case Study Description of ITC Hotels: Designing Responsible Luxury
The case documents the ambitious and revolutionary journey that ITC Hotels undertook to create, execute, and implement the novel concept of 'Responsible Luxury'.ITC's hotel division successfully implemented several structure and process-oriented drivers of sustainability by leveraging its dominant position among India's luxury hotels, financial might and overall group commitment to sustainability. These design restructuring efforts resulted in eight of ITC's luxury hotels being awarded LEED (Leadership in Energy and Environmental Design) Platinum ratings, making the ITC Hotel chain the 'greenest luxury hotel chain in the world'. The case provides an overview of the process that ITC Hotels adopted for designing luxury responsibly. It also describes the various challenges and issues that contributed to the management's decision to retrofit eight existing properties and launch ITC Gardenia along LEED guidelines to attain Platinum ratings. The case is set against the backdrop of a meeting at which Nakul Anand, Executive Director, ITC Limited , and his top management team are discussing the possibility of retrofitting eight of ITC's existing luxury hotels along LEED Platinum rating parameters. In order to make ITC Hotels the world's greenest luxury hotel chain, they know that not only will they have to design their future properties along LEED guidelines to attain Platinum ratings, but will also have to remodel the structural design, systems and processes at their other luxury brand hotels in India. Since the 1980s, ITC Hotels had tailored their service and product offerings around environmental concerns such as water recycling, energy conservation and waste management. However, these efforts had to be significantly scaled up to meet the strict standards of LEED. This scale-up involved significant costs, operational redesign and revamping of the organizational culture. Given these challenges, Anand and his team are faced with the question: Should they or should they not retrofit the existing properties?
Swot Analysis of "ITC Hotels: Designing Responsible Luxury" written by Tonya Boone, Nalin Kant Srivastava, Arohini Narain includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Itc Hotels facing as an external strategic factors. Some of the topics covered in ITC Hotels: Designing Responsible Luxury case study are - Strategic Management Strategies, Innovation, Managing organizations, Sustainability and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the ITC Hotels: Designing Responsible Luxury casestudy better are - – challanges to central banks by blockchain based private currencies, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, increasing transportation and logistics costs, wage bills are increasing, cloud computing is disrupting traditional business models,
increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of ITC Hotels: Designing Responsible Luxury
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ITC Hotels: Designing Responsible Luxury case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Itc Hotels, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Itc Hotels 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 ITC Hotels: Designing Responsible Luxury can be done for the following purposes –
1. Strategic planning using facts provided in ITC Hotels: Designing Responsible Luxury case study
2. Improving business portfolio management of Itc Hotels
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Itc Hotels
Strengths ITC Hotels: Designing Responsible Luxury | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Itc Hotels in ITC Hotels: Designing Responsible Luxury Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Itc Hotels 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)
– Itc Hotels 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 ITC Hotels: Designing Responsible Luxury - 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 Itc Hotels 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.
Successful track record of launching new products
– Itc Hotels has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Itc Hotels 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.
Low bargaining power of suppliers
– Suppliers of Itc Hotels in the sector have low bargaining power. ITC Hotels: Designing Responsible Luxury has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Itc Hotels to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Itc Hotels is present in almost all the verticals within the industry. This has provided firm in ITC Hotels: Designing Responsible Luxury 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.
Ability to lead change in Leadership & Managing People field
– Itc Hotels 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 Itc Hotels in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the ITC Hotels: Designing Responsible Luxury 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.
Learning organization
- Itc Hotels 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 Itc Hotels is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in ITC Hotels: Designing Responsible Luxury Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Itc Hotels is one of the most innovative firm in sector. Manager in ITC Hotels: Designing Responsible Luxury Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Leadership & Managing People industry
– ITC Hotels: Designing Responsible Luxury firm has clearly differentiated products in the market place. This has enabled Itc Hotels to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Itc Hotels to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Itc Hotels is one of the leading recruiters in the industry. Managers in the ITC Hotels: Designing Responsible Luxury are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses ITC Hotels: Designing Responsible Luxury | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ITC Hotels: Designing Responsible Luxury are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study ITC Hotels: Designing Responsible Luxury, in the dynamic environment Itc Hotels has struggled to respond to the nimble upstart competition. Itc Hotels has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Itc Hotels is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Itc Hotels needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Itc Hotels to focus more on services rather than just following the product oriented approach.
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 Itc Hotels supply chain. Even after few cautionary changes mentioned in the HBR case study - ITC Hotels: Designing Responsible Luxury, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Itc Hotels vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study ITC Hotels: Designing Responsible Luxury 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 ITC Hotels: Designing Responsible Luxury can leverage the sales team experience to cultivate customer relationships as Itc Hotels is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study ITC Hotels: Designing Responsible Luxury, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Capital Spending Reduction
– Even during the low interest decade, Itc Hotels 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 decision making process
– As mentioned earlier in the report, Itc Hotels 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. Itc Hotels 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.
High cash cycle compare to competitors
Itc Hotels 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.
Interest costs
– Compare to the competition, Itc Hotels 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 star products
– The top 2 products and services of the firm as mentioned in the ITC Hotels: Designing Responsible Luxury 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 Itc Hotels has relatively successful track record of launching new products.
Need for greater diversity
– Itc Hotels 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.
Opportunities ITC Hotels: Designing Responsible Luxury | 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 ITC Hotels: Designing Responsible Luxury are -
Loyalty marketing
– Itc Hotels 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.
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. Itc Hotels can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Itc Hotels 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 Itc Hotels to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Itc Hotels can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. ITC Hotels: Designing Responsible Luxury 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 Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Itc Hotels 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. Itc Hotels 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Itc Hotels can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Itc Hotels 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, ITC Hotels: Designing Responsible Luxury, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Itc Hotels 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 ITC Hotels: Designing Responsible Luxury - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Itc Hotels to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Itc Hotels is facing challenges because of the dominance of functional experts in the organization. ITC Hotels: Designing Responsible Luxury 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Itc Hotels can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Itc Hotels to increase its market reach. Itc Hotels 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.
Creating value in data economy
– The success of analytics program of Itc Hotels has opened avenues for new revenue streams for the organization in the industry. This can help Itc Hotels to build a more holistic ecosystem as suggested in the ITC Hotels: Designing Responsible Luxury case study. Itc Hotels 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 Itc Hotels in the consumer business. Now Itc Hotels can target international markets with far fewer capital restrictions requirements than the existing system.
Threats ITC Hotels: Designing Responsible Luxury External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ITC Hotels: Designing Responsible Luxury are -
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 Itc Hotels.
Increasing wage structure of Itc Hotels
– 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 Itc Hotels.
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. Itc Hotels 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.
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.
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. Itc Hotels needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Environmental challenges
– Itc Hotels 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. Itc Hotels can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Itc Hotels 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
– Itc Hotels 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.
Technology acceleration in Forth Industrial Revolution
– Itc Hotels has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Itc Hotels needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ITC Hotels: Designing Responsible Luxury, Itc Hotels may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Itc Hotels 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 ITC Hotels: Designing Responsible Luxury .
High dependence on third party suppliers
– Itc Hotels 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.
Shortening product life cycle
– it is one of the major threat that Itc Hotels is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of ITC Hotels: Designing Responsible Luxury 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 ITC Hotels: Designing Responsible Luxury 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 ITC Hotels: Designing Responsible Luxury 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 ITC Hotels: Designing Responsible Luxury 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 ITC Hotels: Designing Responsible Luxury 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 Itc Hotels needs to make to build a sustainable competitive advantage.
