Competitive Strategy Questions競爭戰略問題
InUK the hotel industry is in the mature growth phase of its life cycle (IBISWorld (2014) - H4401 Hotels and Resorts inUK Industry Report_IBISWorld July 2014). In this part you are required to study theUKn Hotel industry and then develop and justify an alternative viable blue ocean strategy approach(s) for Astor Lodges if it were to set up business in UK. To successfully complete this component you must be able to demonstrate at least a clear understanding of the application of Blue Ocean principles and methods to the Astor lodge context. To achieve higher grades you must be able demonstrate a realistic and viable (both logically and financially) Blue Ocean opportunity which is consistent with the theory.
The marketing competition has become increasingly forceful in UK Hotel Industry during several decades because this region posses a blessed geographic location with beautiful scene which attract a lot of tourists. Hence, the suitable of marketing strategy for the hotel is important.
This essay is mainly discuss a hypothetical competitive marketing strategy of Astor Lodges & Suites, Inc. Before that, the current situation for UK hotel industry will be introduced, and also the briefly presenting for core conception of Business Ocean Strategy is going to be included in this part. As well known, the hotel industry life cycle inUK is in the phase of mature growth. I will suggest and demonstrate an available blue ocean strategy method for Astor Lodges & Suites, Inc. once it projected to prepare arranging business inUK. There are some analysis and creative perception will be shown at case resolution.
Blue Ocean Strategy Synopsis
Blue Ocean Strategy is the international advanced exercise in innovation strategy. It releases previous business styles from the severely competitive actions to make untapped demands and profitable emergent. (BERG Consulting, 2014) A key conception from Blue Ocean Strategy is to innovate a jump in value for both the organizations and its purchasers by redesigned the distinctions or less expense business and to reconsider the real value of commodities and profit propositions. From Kim and Mauborgne (1999) stated the Blue Ocean Strategy has hundreds year historic with the result of a long-term study of one hundred and fifty strategic moves spanning more than 30 industries.
The Blue Ocean Strategy is well-recognized in modern marketing. In opposite to common supposes that organization’s is less necessary for predicting to make breakthrough growth. Many outstanding creations have been invented from inside prevailing, forceful free-enterprise industries, and a majority of them are derived from the core profession. Breakthrough growth is not ought to be considered substantial asset investments in response of innovated strategies. It is highly possible to link with conception evolutionary and version changing towards organizations and industries.(BERG Consulting, 2014)
The other creation in Blue Ocean Strategy is the strategy canvas perspective. It handles present organization’s activities in marketing. This emphasis on the challenging of investing direction, available products and services. There are two axis tablet that can on behalf of strategy canvas, the horizontal line indicates commodities features, it is likely to be cost, period or added value. Vertical line representative the supplying level of these features. For instance, in case of replay value, a high offering value would indicate a higher replay value. (BERG Consulting, 2014)
If the company want to succeed in the future, it should stop competing with each other and stop making effort to struggle against inside the current scopes. Two famous marketing universe formed by two ocean theory: red oceans and blue oceans. Red oceans often indicates entire industries in being today that has been known as current market space. Blue oceans contribute all of the industries not in existence today with unknown future market field.
Figure 4: The Profit and Growth Consequences of Creating Blue Oceans
(Kim & Mauborgne, 2005)
Kim and Mauborgne (2005) took a investigation in 108 companies, the study has found 86% theses corporation’s incremental competed to existing industry offerings within red oceans while only 14% were targeted creating new markets. While line expansion in red oceans accounted for 62% among total earnings, they only consigned 39% of whole revenues with a shocking 61% from all profits. The business contained the entire amount investments to drive for creating red and blue oceans. From Figure 4, it can be seen the achievement of business in creating blue oceans are obviously.
The present business relinquishment has forced pushing out a increased proposal to create blue oceans. Hastened technological progressing have considerable changed the productivity of emergency industrial and permitted suppliers to manufacture an exceptional array of commodities and serving. (Robynne, 2014) The movement toward globalization intensify of the situation, because business limitations between countries and regions are demolished. Moreover, it is also able to make information on commodity and prices turn directly available all over the world, hence the monopoly enterprises would eventually continuing to died out. The Blue Ocean Strategy can speed up the revolution of manufacture’s style that reflect from throwing extracted price competition and expanding profit margins.#p#分頁標題#e#
Importantly, the six rules of Blue Ocean Strategy (BERG Consulting, 2014) is acted as fundamental principles during the strategy designing process.
Restructured market boundaries
Emphasis on the macro-environment not singles
Arrive at exceeding existing requirement
Become the strategic continuation right
Conquer virtual organization barrier
Carrying into action in the strategy
On the other hand, Blue Ocean Strategy is great different with other marketing strategic which through driving implementation participated in operational process. From Kim and Mauborgne (2005) researched that about 60% of all marketing projects in UK seldom accomplished. Despite of business conditions demonstrate a increasingly imperative of blue oceans, there is a common accepted that the achievement are fewer while companies risks exceeding existing industry field. The problems is “what measures can drive business favorably through blue ocean strategy”, “How can organization’s programmed seeking for more chances while eliminating the risks of creating blue oceans? (Chan & Mauborgune, 2014)
Figure 5: The Four Step Fragments of Blue Business Strategy
(Kim & Mauborgne, 2005)
To evaluate the purchaser value features in crafting a emergency value curve, the Blue Ocean Strategy improved the four steps of framework. It shown from Figure 5, the project that requires four important problems to defy an industry’s strategic logical system and business standard.
Briefly Introduce ofUK Hotel Industry
The hotel in UK that are allowed to drive a public club and offer accommodation like a lodges or suite which contains exceed fifteen rooms with a bathtub and extra fundamental facilities like coffee maker and televisions.
Because the currency rate of UK has fallen, the hotel and resorts industry are influenced by fluctuating of international market, the entire hotel industry planes to stimulate the occupancy rate of hotel industry from domestic travelers. (Melbourne, 2014)
The hotels and resorts industry has came into view from the economic remission which earnings was bog down for the reason of eliminated inquiring from both enterprises and travel segments. According to IBISWorld industry analyst indicated (2014) that the industry of UK hotels and resorts have been faced a forceful challenge based on different composed by lodging especially the hotel services which were cultivated to food and refreshment for the remunerative corporation’s segment. During the year of 2008 and 2009, the total earnings from 8.4% decreased to 3.1% within the year between 2009 and 2010. This phenomena was due to economic crisis around the world substantially destruct in trading confidence and consumer’s persuasion.
Whereas, the hotel industry has already recovered following a revival of domestic traveler numbers. Hence, the total earnings of hotel industry is looked up a compounded increasing to 3.1% under next five years with arrived at $6.1 billion. (Melbourne, 2014) In the past, a large number of business owners from hotel and resort industry faced to the worse economic environment through eliminating room rates and supplying extra services like free meals or check in service. Despite that the average occupancy rate still lower than the same period of historic standards,UK hotels and resorts industry average prices inside major cities maintained a good level. (BERG Consulting, 2014) However, the financial remission brought arduous operating surroundings,UK hotel industry still turned around to rise, especially the hotel and resorts industry performed outstanding during the last three years. During the years from 2013 to 2014, the revenue derived from occupation, especially in the urban regions, expected to boost to 4.0%.
The hotels and resorts industry in UK n demonstrated inferior level in market share, and the framework of the hotel industry changes considerable. (ANZSIC H4401, 2014) For instance, the amount of administrative alliance and leasing in the UK industry raised stable due to the business owners were highly likely to not to posses a motel instead of focusing on operating a motel. Therefore, a lot of hotel self-reliant owners operate mature market that predominant in rural or apart from the remunerative city center, and the gathering tendency to be lessen. In the last decade, some owners of independent motel took part in unions such asUK Hotel Association, so the industry’s unique dominant participant is AAPC Limited. (Global Hotels & Resorts, 2012)
Implementing Business Ocean Strategy in Astor Lodges & Suites, Inc.
Astor Lodge & Suites, INC was established in 1979 and without profitable for five years, and the services of economy hotels and mid-scale class hotels are supplied by Astor Lodge and Astor Lodge & Suites respectively. As for above discussion, the condition of operating Business Ocean Strategy to Astor Lodges & Suites, Ltd should create a new value in uncontested markets, whereas conventional business strategy models emphasis on competing within the existing marketing through read ocean rules. (Halligan, 2014) Hence it should to recognize the business context form organization through SWOT analysis tool, the detailed feathers are displayed in Figure 6.
Figure 6: SWOT Analysis
The average occupancy rate of Astor Lodge & Suites Inc is 67.1% which higher than the 61.3% of average level in the industry.
The revenue of growth rate of Astor Ledge & Suites Inc was 7.4% greater than the 5.8% of limited-service hotel.
The consumer have an awareness of brand cognition and loyalty.
The business tenants complained due to targeted advertising population.
The occupancy rate was 60% during the weekend while it relative weaken.
Astor Lodge & Suites Inc continued 5 consecutive year of without profits.
The competitors were operating business for profits.
The prices of Astor Lodges & Suites, Inc was $57.52 which lower than the average level of industry.
A 7.6% increasing in the industry experiencing
The highly competition of substituted hotels.
External business environment was inevitable such 9/11 accident.
From Figure 6, depend upon the SWOT analyzed tool, the section of weakens in Astor Ledges & Suites was gathered in company’s strategies. And the opportunities is more integral on their price. So, from my perspective, it is urgent to make some adjustments in corporation’s marketing strategy in order to shorten the distinctions from average hotels and enlarge the corporations advantages.
For Astor Ledges & Suites, Inc, it also need to consider four segments issues while the corporation deciding to enter the UK hotel industry. Firstly, some less useful or encumbrance factors need to eliminate from hotel services and products however theses factors may be convinced it should exist here. Secondly, some data compared with hotel industry could be lower than the industry average level, such as occupancy rate, room rate, facilities standard etc. Moreover, some services and products supplied by hotel should greater than average level due to enlarge more prior strengthens. It may cause the customers make compromise for exploiting new field of industry. Eventually, new marketing means new innovation in the hotel marketing, Astor Ledge & Suites, Inc need to think about their advantages that to be contingency with UK consumer’s requirement.
Many of full-service hotels are highly like to be the superior hotel, the business owners usually concentrate on the resources and prices competition which targeted to supply synthesized services and extended the resources in hotel management. Through red ocean catching up over other substituted hotels that resulted the homogeneity among hotels and exaggerated competition leading profit downward. However, Astor Lodges & Suites as a new entrance in the middle of limited-service hotel and economy hotel obeyed Blue Ocean Strategy to abnegate vicious competition, extend their business to the newly marketing scope. The corporation decided to use growth of profits before interest, taxation, depreciation and amortization a a company’s goal instead of unprofitable situations. Also, the budget adjustment make hotel targeted consumer slightly changing, it not only focus on prices campaign but merely make effort to provide tenants comfortable and pleasurable services so that this strategy has bolstered a large number loyalty customers.
For achieving more opportunities, Astor Ledge & Suites, Inc. should pay attention:
Innovation: tools or directions to assure innovation factors in marketing strategy redesign.
Industry data: It is essential for the organization for apply these factors into the hotel industry like without coordinating with consumers and industry statistic that may be greatly change guest’s decision making in the future.
Consumer-centered It encourages to improve Astor Ledges & Suites acceptance to the first stay guests.
The available alternatives for Astor Lodges & Suites may be thought about from the shortage of previous business plan. Firstly, it is a suitable adjustment to cancel the marketing competitive strategy of “free night stay” due to a great lost in revenue was appeared by this deal. Also, the “free night stay” mainly aimed at the travelers which was a dominant reason resulted to business tenants make complains towards leisure customers. Secondly, the hotel can substitute original deal by the strategy of “weekend special” which not only assist Astor Lodges to enhance the occupancy rate but also attract families seeking for cheap price. The most important it can offset some losses caused by “free night stay”. Thirdly, the Business Ocean Strategy apples to avoiding price campaign so the hotel can increase a certain degree of the room rates because business guests might less care about the prices. Fourthly, the organization ought to make an adjustment of media advertising budget since business guests were likely to ignore the advertisement as well the leisure tenants were opposite
Some possible results can be occurred after changes based on Blue Ocean Strategy. Obviously, it will receive nearly a half of losing earnings from the new “weekend special” strategy without emerge fluctuations in occupancy. The distribution of media advertising make the tourism tenant feel more favorable to accept the sale information for Astor Lodges & Suites. Whereas, From the Figure 7, the assumed plan of raising the room rate is possible to employ the occupancy rate decrease with lost of earnings.
The Business Ocean Strategy assist Astor Lodges & Suites, Inc to better understanding the marketing requirement of tenants, challengers, partners and friendly business circumstance. It brought a new style for Astor Lodges & Suites to framework their future market, and also, the Blue Ocean Strategy transformed Astor Lodges & Suites outmoded version that only concentrated on from aspects of price and advertising emulated with its competitors, and more prefer to considering how to create a new market more suitable them. It was not only able to eliminate heavily cost but also create more opportunities. Through analyzing organization’s marketing strategies from diversified statistics it can realize the outstanding effective of business objectives which would be derived from the successfully applying Blue Ocean Strategy. Hence, Astor Lodges & Suites, Ltd can obtain maximum profits through more unexploited opportunities in a sustainable challenge priority. Whereas, there is still some obviously shortage from marketing strategy from Astor Lodges & Suites which may result the fluctuation of implementing the Blue Ocean Strategy.
Astor Lodges & Suites, Inc. will continue improving and stable for its present marketing positions as the inferior conception on innovation and strategies once the corporation are engaged into Blue Ocean Strategy. Most seriously there is no once-off project, the organization will be intertwined innovation and the principles of blue ocean strategies into macro market which has decorated a procedure of persisting creating, developing and learning. For a good business, it is really need to balance both internal and external strategies. The theoretical and tools analyzed from this essay are essential for applying to hotel industry that is possible to be conducted to allow companies to break from the previous challenge circumstance and implement blue oceans of uncontested market space. The market scope are never constant and the Blue Ocean Strategy have continually been innovated over time.
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