Strategic alliances in hospitality industry

1. KRISHNA. B

2.  An alliance as a strategy is viewed from
the perspective of a firm’s risk exposure
in terms of environmental uncertainty
 It is an organizational survival strategy
that can help firms re-establish
themselves in their competitive domain
 Key source of value addition and
implementation process to the firm

3.  According to Parkhe, “Strategic
alliance can be defined as a
cooperative agreement involving two
or more firms through which linkage
are built to share resources, leading to
the joint accomplishment of individual
goals”
 “Organizational structure to govern
an incomplete contract between
separate firms”- Gomes Casserres

4. Risk reduction
Achieving economies of scale
Technological exchanges
Creating barriers to entry /blocking
competitions
Overcoming government-mandated trade
or investment barriers
Facilitating international expansion of
inexperienced firms

5. Co-specialized resources and capabilities
Sharing information
Reacting to market opportunities faster
Sharing and enhancing firm-specific knowledge
and learning
Cost reduction

6.  Independence of partnering firms is
retained
 They are non-equity based alliances
 A separate entity is not created in an
alliance
 Firms use their strengths to create co-
specialized assets to tap market
opportunities
 It can be formed by firms across
industries or between competitors with in a
given industry

7. Respond to environment uncertainties and
turbulence
Deal with the risk exposure in domestic and
international markets
Create avenues for growth in mature and
new markets
Be able to put the core resources and
competencies to productive use
Develop new competencies through inter-
organizational learning

8. Difficulty in identifying strategic partners
Non-compatibility among partners
Resources and time commitment required in
getting partnering firms to agree to each other’s
terms and conditions
Opportunism and potential for entering into
conflict
Barriers to terminating the alliance including
cost
Coordination cost and mechanisms related to
alliance activities

9. Classified into 2:
FORMAL and INFORMAL
 FORMAL: Seen in joint ventures
wherein 2 firms come together to create a
new entity, in which equity participation
from both parties takes place
 INFORMAL: Leads to cooperative
arrangements which results in
collaboration entailing `

10. • Categorized based on vertical and
horizontal arrangement:
“x” and “y”
X Y
vertical collaboration Horizontal collaboration
alliance b/w buyer &
seller
competitor alliance
specialized in different
functions
same - function

11.  Alliances with in Raffels Group and Taj
Group of International
Main objective: create access to market
for both firms where they do not have a good
enough presence
 Between Star Wood hotels and
Vaccation.com
Created to provide Vaccation.com members
with access to Starwood hotel products which
provides “initiatives and incentives for their
member agencies to promote and sell more
hotel accommodations”

12.  Le Meridian and Nikko Hotels
Focus is on their booking system so that
customer’s could provide world wide “one
stop” option
 Doubletree Hotel and Corporation New
York Citizen
Co-branding has been used as an alliance
strategy by hotel and restaurant

13.  Alliance has been used as a vehicle to
address labour shortage issues
 Alliances can range from 2 to several
partners. More than two partners are
called Consortium
 Scope, size and entity are 3 factors that
influences alliance formation
 These examples provide support to
alliances that are effective in addressing
issues in all domains and functions of
business

14. HOTEL COMPANIES RESTURENT COMPANIES
Holiday Inn World Wide Damon’s, Denny’s, TGI
Friday’s, Sara Lee
Doubletree Hotel
Corporation
New York Restaurant
Group
Marriott Hotels Pizza Hut, Trader Vic’s,
Benihana, Studebakers
Hilton Hotels Trader Vic’s, Benihana
Four Seasons Dice Ristorante
Hoice Hotels Pizza Hut Picks Food Courts
Promus Corporation Pizza Hut, Grace Service

15. Decision to create an alliance
Develop a plan to build a long term
relationship with the allying party
Develop search criteria to identify the
prospective manner
Process information for decision making
related to alliance partner selection
Negotiate and develop the contract(where
applicable)

16.  Future research in hospitality alliance
domain should focus on the evolution of
hospitality industry
 Failed alliance suggest that opportunism is
detrimental to the success of alliance
 Create alliances by identifying the partners
in the first place by using good selection
criteria and managing the process in an
effective manner
 Informal structure might develop as
alliance matures resulting from the
development of trust

17.  Strategic alliances are considered as
vehicles that of growth that provide
partners with access to each other’s
resources so that they could address
threats
 Essential for firms to use alliance to access
market globally
 Easier for the customer and provider alike
to create a customized and complete travel
experience

18.  Hand Book of Hospitality Strategic Management
- Michal Olsen and Jinlin Zhao
 Marketing for Hospitality and Tourism
-Philip Kotter, and James Makens
 Hospitality and Travel Marketing
-Alasrair M Morrison
 Strategic alliance: a hospitality industry
perspective (international journal )
-Prakash K Chathoth and Michel D

19. THANK YOU……….