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B. strategy

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This is a discussion on strategy for hospitality

Published in: Travel
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B. strategy

  1. 1. Prof. (Dr.) Nimit Chowdhary Department of Tourism and Hospitality Management Jamia Millia Islamia, New Delhi
  2. 2. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.2 The } Expectations (E) Offer (O) Quality Gap t1 t2 A B C D
  3. 3. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.3 Tourist Expectations Tourist Perceptions Qualit y Gap What destinations do not do? What destinations do? The
  4. 4. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.4 What destinations do? Out perform rivals destinations by creating a perceived value differential that it can sustain
  5. 5. Out perform rivals destinations by creating a perceived value differential that it can sustain Create greater value Comparable value at lower cost Strategic Positioning Operational Effectivenes s
  6. 6. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.6 Out perform rivals destinations by creating a perceived value differential that it can sustain Undertake a lot of activities What combination of activities? (Strategy) How efficiently do we do those activities? (OE)
  7. 7. Positioning of Hotels in Belleville: Price vs. Service Level Expensive Shangri-La High Service Moderate Service Grand Regency Sheraton Italia Castle Alexander IV Airport Plaza PALACE Atlantic Less Expensive
  8. 8. Positioning of Hotels in Belleville: Location vs. Physical Luxury High Luxury Shopping District and Convention Centre Shangri-La Moderate Luxury Financial District Inner Suburbs Grand Regency Sheraton ItaliaCastle Alexander IV Airport Plaza PALACE Atlantic
  9. 9. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.10 Positioning after New Hotel Construction: Price vs. Service LevelExpensive Shangri-La High Service Moderate Service Heritage Mandarin New Grand Marriott Continental Regency Sheraton Italia Alexander IV Airport Plaza PALACE Atlantic No action? Action? Less Expensive Castle
  10. 10. Positioning after New Hotel Construction: Location vs. Physical Luxury High Luxury Shangri-La Financial District Inner Suburbs Heritage Mandarin New Grand Marriott Continental Regency Sheraton Italia Alexander IV Airport Plaza PALACE Atlantic No action? Action? Moderate Luxury Castle Shopping District and Convention Centre
  11. 11. Positioning destinations
  12. 12. Positioning Vs. Strategic positioning A destination can out perform rival destinations only if it can establish a difference that it can preserve Positioning Strategic Positioning Choice of image Choice of combination of activities that will sustain a position
  13. 13. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.19 Operational effectiveness An important source of difference in profitability is how well you use your resources •TQM •Time based competition •Benchmarking •LO and KM •BPR Japanese companies in 80s rarely had any strategies
  14. 14. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.20 Operational effectiveness vs. Strategic positioning Relative cost position Non-pricebuyervaluedelivered high high low low Productivit y frontier t1 t2 Productivity frontier is the maximum value that a company can deliver at a given cost using the best available technology, skill, management techniques, and purchased inputs. Productivity frontier can apply to individual activities such as order processing and manufacturing, and to an entire company’s activities.
  15. 15. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.21 Competitive strategy is about being different Essence of Strategy is in activities Choosing to perform activities differently perform activities different than rivals
  16. 16. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.22 Example: Airlines A full service airline (legacy) – Takes customers (Passengers from almost any Pt. A to any Pt. B) – A large number of destinations – Hub and spoke system – Increased comfort and conveniences Reservations Baggage transfer On flight hospitality
  17. 17. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.23 Southwest Airlines • Short haul • Low cost • Point-to-point – Mid sized cities – Secondary airports – Avoid large airports (Fast turnarounds) • No baggage transfers • No on-board food • No reservations (No travel agent commissions) • No formal uniforms for crew • Mustard red aircrafts • Entire fleet of 737 Boeing • No premium class Low cost- no-frills- fun airlines Customers include business commuters, families, students (those who are price sensitive)
  18. 18. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.24 Origins of strategic position • Variety based positioning • Need based positioning • Access based positioning
  19. 19. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.25 Variety based positioning Based on the choice of product or service varieties rather than customer segments Variety based position can serve a wide array of customers, but for most of them it will only be a sub-set of their needs Offers a particular experience, there are many others Only change of lube and no other repair
  20. 20. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.26 Need based positioning Broad array of needs of a targeted segment of customers Full range of services Offers all furnishing needs of a targeted segment A wide range of grocery Addresses all requirements of a targeted segment
  21. 21. Access based positioning Using a different configuration to reach out for customers
  22. 22. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.28 Sustainable strategy: Trade offs Given an advantageous position, competitors and rivals would try to copy Reposition: HDFC, IDBI Straddle: Continental lite Straddling is matching the benefits of a successful position while maintaining its existing position Tradeoffs will help sustain a strategic position
  23. 23. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.29 Trade offs • Inconsistency in image or reputation • Inconsistency in activities themselves • Limits on internal coordination and control
  24. 24. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.30 1.Inconsistency in image • ‘Haridwar’ or ‘Rishikesh’ cannot become ‘Goa’ or ‘Shimla’ ‘Hamam’ or ‘Lux’ cannot become ‘Dettol’ • Goa being promoted for churches/spiritualism Tata cars have a bad repute for petrol vehicles • ‘Forhans’ tried to become ‘Colgate’
  25. 25. 2. Inconsistency in activities • ‘Chokhi-dhani’ doesn’t satisfy customers who want more service • Destinations that try to do many things confuse their customers
  26. 26. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.32 Continental Lite: Straddling Tried to match S-W on a number of routes • Eliminated meals and I Class • Increased departure frequency • Shortened turn-around times at gates • Lowered fares • Low cost on some routes • Continued to use travel agents • Continued to transfer baggage • Continued to assign seats • Continued with a mixed fleet • Continued with full service on some routes
  27. 27. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.33 Continental Lite: Straddling Internal inconsistency in activities • Delays leaving congested hubs • Delays due to baggage transfer • Higher costs due to: – Travel agents – Maintenance of a mixed fleet – Discounts
  28. 28. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.34 3. Limits on internal control • Chokhi Dhani – Decided not to offer spoons – Dinning on ground • Choosing to compete on one way rather than other • Employees to make day-to-day decisions to an operational framework This is culture
  29. 29. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.35 Fits First order fit Simple consistency Second order fit Reinforcing activities Third order fit Optimizing effort
  30. 30. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.36 Limited passenger service Frequent, reliable departures Lean, highly productive ground and gate crew Very low ticket prices Short haul, pt.- to-pt. routes between mid- size cities and secondary airports High aircraft utilisation No baggage transfer No meals No seat assignme nts 15-minute gate turnaroun ds High compensa tion of employee s Flexible union contracts High level employee stock ownership Limited use of travel agents Automatic ticketing machines Standardi sed fleet of 737 aircraft No connectio ns with other airlines SouthWest The lowfare airline
  31. 31. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.37 A Strategy is… • Defining a company’s position • Making trade-offs • Forging fits Look out for… ◼ False trade-offs ◼ Bumping against frontier ◼ Horizon of a decade or more
  32. 32. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.38 A leadership… • Vision for a position • Having in place a system of values and beliefs Two Things Set a direction for organizational effort Effect move in that direction
  33. 33. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.39 Alice in wonderland! Alice Would you tell me, please, which way I ought to go from here? Cat That depends on where you want to get to. Alice I don't much care where.... Cat Then it doesn't matter which way you go.
  34. 34. 19 April 2019 (c) Dr. Nimit Chowdhary, Professor Slide.40 Summarizing this session • Value is not in position but how you reach that position • Decide how you are going to differentiate from the competition and then focus all your efforts towards that • All your marketing mix elements need to reinforce the acquired position • Fit among your activities is going to determine sustainability of your competitive advantage

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