Hult IBS Scenario Planning-Club Med - JUNE-13
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This was a mock exercise, as part of Scenario Planing (STR6050) at Hult International Business School in San Francisco. We looked into the future of Club Med and came up with "future-proofed" moves they could implement to secure growth in China. -------------------------------------------------- Exert from my notes: * Strategies are visions, not plans. * Strategic planning is NOT strategic thinking (or the formulation of strategies) * Strategic thinking is about synthesis. It involves intuition and creativity. * Fallacies of Strategic Planning * Prediction is possible * Strategists can be detached from the subjects of their strategies * Without a crystal ball, formulating strategies for "one possible future" is like shooting in the dark... * Scenario planning is the art of crafting different future scenarios. * Combine facts and related social changes to come up with "scenarios"... Possible futures. ------------------------------------------------ More about Hult: hult.edu More about Scenario Planning: http://www.economist.com/node/12000755 and http://en.wikipedia.org/wiki/Scenario_planning
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Hult IBS Scenario Planning-Club Med - JUNE-13
- 1. Scenario Planning for a Robust Future Maximilien | Guy | Eleonora | Tri | Dan| Xuan | Yuhua (Ina)
- 2. HOW CAN CLUB MED SUCCESSFULLY POSITION IN THE ASIAN MARKET?
- 3. How will LEISURE & TRAVEL evolve in EAST ASIA in the next 10 YEARS in ways that matter to Club Med ?
- 4. There are many driving factors shaping Club Med’s future. Air Pollution Water Pollution Sports Tourism Visa Requirements Tariffs Terrorism Social Connectivity Relations with Europe Leisure Budget Demographic Changes Racism Internet Security Payment Innovation Int’lrelations SexIndustry Stress Levels Happiness Transportation Discretionary Income Political & Social Stability Technology Innovation
- 5. Scenarios
- 6. Political & Social Environment Unified, Collaborative Atomized, Restrained Technology-enabledLeisure Low-Tech, Conventional Sophisticated, Distributed 4TH DIMENSION 12 BIG BROTHER 4 KUMBAYA 3 LOST DECADE Using the two most impactful, uncertain forces, we build four distinct scenarios
- 7. The 4TH DIMENSION is a very open and collaborative world where technological advancements enabled new leisure options Tensions between China/Japan eased Financial Crisis, Arab Spring 3D chip architecture No visa policy Unified, Collaborative Sophisticated,Distributed Free trade zone, East Asia
- 8. Customers wants customized, highly sophisticated leisure options Customers want… Technologically-rich environments Customized service “Work/Travel” balance Implications for the industry… Market is growing Number of partnerships increases Focused offering
- 9. Thanks to new technologies, “BIG BROTHER” is watching your every move, specially if you are a foreigner Atomized, Restrained Sophisticated,Distributed Reduction in foreign investment Greek debt crisis Tech. advancements (shale gas, high-speed transportation) Nationalistic sentiments increase Border restrictions
- 10. Travel is mainly internal and customers are looking at escapes from their stressful, fast-paced life. Customers want… Local travel options Real world experienced individually, virtual experiences shared Want escape from the feeling of being watched Technology aids escapism Implications for the industry… Travel is internal rather than international Threat of substitutes is high Threat of new entrants is low Low level of trust means brand equity is extremely important
- 11. The “LOST DECADE” is a world in which financial crisis and political instability fuels high tension between countries and close to no technological innovation Atomized, Restrained Low-tech,Conventional Financial crisis Asia Real estate bubble Technology funds depleted Territorial disputes Restricted int’l travel
- 12. The “LOST DECADE” is a gloomy world where travel is domestic and customers are cost sensitive. Customers want… Options priced for them Local travel options Implications for the industry… Resorts must reduce offerings, cut costs Be energy sufficient
- 13. Options
- 14. Bet on tech partnership In “4TH DIMENSION”, Club Med should revamp its offering and more to a higher-end, more luxurious market Unified, Collaborative Sophisticated,Distributed All-inclusive, new and improved More customized services, More luxurious. Focus operations (specialize) Clean energy Robust Big Bet Core/Sat Work/Travel Balance In a nutshell… Develop touring offering Produce Shows Cloud-based documents reaches # Shared Patents / Total New Patents Triggers…
- 15. In “BIG BROTHER”, Club Med should respond to the desire for localized, retreats. Atomized, Restrained Sophisticated,Distributed More retreat, “disconnected” time Focus on internal Robust Big Bet Core/Sat In a nutshell… All-inclusive, new and improved Produce Shows Work/Travel Balance Bring the culture to me Clean energy Develop Touring Enhance monitoring capabilities for travels # Visas applications decreasing Triggers…
- 16. In “LOST DECADE”, Club Med should offer lower-end, cost-cutting options and tightly manage its operations Atomized, Restrained Low-tech,Conventional Meet “cost-cutters” demands Focus on internal travel Develop new strengths & capabilities Robust Big Bet Core/Sat In a nutshell… All-inclusive, new and improved Bring the culture to me Clean energy Develop Touring Bet on “The last paradise” Produce Shows Decline in FDI in tech in Asia Decline in number of visa applications for skilled workforce Increase patents-related lawsuits by foreign entities Triggers…
- 17. Four “future-proof” options can be executed that will strengthen Club Med’s position All-Inclusive, New and Improved Clean your energy Develop Touring Offerings Produce Show Bet on a tech partnership Bring the culture to me Balance my work/travel life 4321 Bet on “The last paradise” “Future-proof” Options
- 18. Key indicators for each scenarios can be monitored and can hint at what scenarios is coming to life Size of cloud-based documents # Shared patents ------------------------- Total new patents - Decline in FDI in tech in Asia - Decline in number of visa applications for skilled workforce - Increase patents-related lawsuits by foreign entities # Visas applications decreasing Enhance monitoring capabilities for travels
- 19. WHERE WILL YOU SPEND YOUR NEXT HOLIDAY?
Editor's Notes
- There are a lot of driving forces shaping Club Med’s future. Trends, fadsUncertain, most impactful ones:Political & Social StabilityEnvironmental ChangesInternational RelationsEnergyTerrorism and Safety
- Global financial and politicalcrises lead governments in East Asia realize that internal stability can be facilitated through increased regional cooperation, openness and cultural exchange. The renewal of peace talks between the Koreas shows that reconciliation is possible. By 2023, East Asia has created a free trade zone. Governments in the region establish a no visa policy for travel in East Asia.3D chip architecture becomes a commercial reality in 2014 or 2015, followed by quantum computing and neurological net computing by 2021. Miniaturization and nanotechnology developments make personal data collection normal and allow for behavioral/biological security measures. By 2018, personal internet security is no longer a major concern for most individuals due to the correlation of behavioral and locational data with bio-security and traditional passwords.The world in 2 sentences (high-concept)Technology enables free access to information and easy collaboration between consumers across the region, leading to automatically customized leisure and travel options aimed at individuals based on their behaviors and spending patterns. Technological availability lowers barriers to entry and forces innovative services and customized experiences.
- Territorial disputes create high tensions in the region. The financial crisis creates distrust of high interconnectedness. (Greek crisis, US crisis)By 2015 countries in Asia take steps to reduce their investments in each other. Nationalism is running high by 2018 as territorial and fierce economic competition create barriers to trade, travel, and transfer of intellectual property.Several major innovations that have had a huge impact on the region. Energy sector advances reduce costs of shale gas, so China has reduced its dependence on coal, reducing pollution in the region. By 2017, there are major improvements in the speed, safety, and efficiency of travelpolitical and social tensions limittravel improvements to domestic travel only. Incidents of state-sponsored cyberattacks increase, making ecommerce much more difficult.International terrorism and general distrust of foreigners, visa requirements increase.Visitors are closely monitored. Some Asian countries use technology improvements to increase monitoring of their own citizens. In effect, technology has turned these countries into surveillance states.
- Travel is more domestic than internationalThreat of substitutes is highCan be entertained at home without spending the money to go all the way to a resortLow trust means:Threat of new entrants is lowPeople don’t trust companies they haven’t heard ofMust have very secure payment infrastructureBrands become more importantBargaining power of buyers is highPartnerships are reducedVery localized, barriers to international partnerships too highTravel tightly controlled by governmentsFor example, Chinese people can do a virtual tour of Tibet. The Chinese company directs the virtual tour company to make Tibet appear very “harmonious.”People prefer to travel with close family and friends rather than being in places with a lot of strangers.Consumer desire to disconnect from this high-tech, plugge-in, highly monitored worldResort firms must be highly specialized at smoothing real-world travelVisa processesSafetyPeople feel stressed by government monitoring and omnipresent technologyDesire to unwind, escapeHaving a broad offering is keyPeople don’t have enough trust to go through multiple vendors. They want to go through one company that can provide a wide range of services.Trust level is low
- In 2013, many economists were concerned about whether or not China could sustain its economic growth. a few years later, it’s clear that China’s rapid expansion produced bubbles, which burst. One of these bubbles was real estate, another was loans to local governments, who defaulted China went through a financial crisis, which hurt the high-tech economies of the region like South Korea, Japan, and Taiwan. Spending power reduced dramatically as unemployment rose throughout Asia. Resentment, nationalism, and territorial disputes increased regionally. Leisure consumers are hurt by all of these events. They have a high desire for new experiences, but lack of new technology creates a stagnant travel industry dominated by conventional leisure offerings.Consumer spending on leisure is down as nations navigate through the Asian Financial Crisis. Due to the government lending issues with state-owned banks and the resulting loan defaults, the Chinese government stops funding clean-tech consumption of dirty fuel sources like coal increases, and therefore so has pollution. Due to the political hostilities in East Asia, traveling across borders is highly restricted and difficult. In addition, there has been a dramatic rise in the incidence of state-sponsored cyberattacks. This has made ecommerce much more difficult, As a result of all of these factors, the travel and leisure industry is focused on domestic travel, rather than international.
- Territorial disputes create high tensions in the region. The financial crisis creates distrust of high interconnectedness. (Greek crisis, US crisis)By 2015 countries in Asia take steps to reduce their investments in each other. Nationalism is running high by 2018 as territorial and fierce economic competition create barriers to trade, travel, and transfer of intellectual property.Several major innovations that have had a huge impact on the region. Energy sector advances reduce costs of shale gas, so China has reduced its dependence on coal, reducing pollution in the region. By 2017, there are major improvements in the speed, safety, and efficiency of travelpolitical and social tensions limittravel improvements to domestic travel only. Incidents of state-sponsored cyberattacks increase, making ecommerce much more difficult.International terrorism and general distrust of foreigners, visa requirements increase.Visitors are closely monitored. Some Asian countries use technology improvements to increase monitoring of their own citizens. In effect, technology has turned these countries into surveillance states.
- All-Inclusive, new and improvedRethinking, reinventing the definition of “all inclusive”. CM pioneered the concept, in (1950). Niche offering… Not barriers. Now, crowded place. Need to differentiate, provide additional value.No matter where the world is heading, there is a need to fundamentally rethink what “all inclusive” means. The very definition of travel and holiday changes in the future, and CM needs to adapt. e.g. In “Big Brother” scenario, customers are travelling internally and are thus developing a stronger sense of patriotism. At the same time, they want to maximize their holiday, not feel restrained by “artificial boundaries”. In this world, Xuan buys a monthly pass that gets him access to all CM facilities anywhere in the country. He spends 5 days in the north with a friend that lives close by, before flying down south to catch few days of sun before returning to Shanghai.Clean tech -> energy sufficient, zero waste.. Also good to “reinforce the brand” In scenarios where energy prices are going up, this becomes a no brainer (save $). In those where it’s going down, the impact of technology makes clean tech competitive. From an operations standpoint, it makes sense. Bonus point: reinforce your brand. Tell your customers. Develop Touring Offering ->Domestic or international travel, we see an increase in touring, cultural and adventure travel happening across all scenarios. In high-tech, fast paced world, customers want to see more and faster. In the atomized world, customers wants to see more culture, get to know their own country better (specially if there ain’t any good beach resort).Moving people around on tours requires a different skillset from operating resorts -> need to develop that.It’s a first step that should be taken quickly no matter what. We recommend partnering or acquiring a small player, in a region like southeast asia to start building both skill set and business.ShowsThe need for entertainment increases (productivity increases, more holidays, more connectivity that enables flexible working arrangements).Strength of CM: CM is producing more than 80 shows (dancers, lighting effects, sounds etc…) every night. For the past decades.
- Size of cloud-based documents doubles (from its 2013 level)