Porter's generic competitive strategies provide tools that enable organizations to attain and maintain the competitive advantage throughout their markets. Porter suggests that companies can choose to adopt any of the three competitive strategies, namely cost leadership, differentiation, and focus, or combine strategies (Gamble, Thompson& Strickland, 2010).Within the hospitality industry, hotel management companies face significant challenges with regard to attaining competitive advantages within the highly competitive market. The rationale of this paper is to present a competitive strategy analysis of hotel management companies and their services. This paper will then demonstrate the application of one of Porters generic competitive strategies to attain a competitive edge for hotel management companies.
A hotel management company can choose to pursue one or more forms of competitive advantage, for instance, offering lowly priced products than its competitors, by adoptingdifferentiation in service or business aspects valued by customers, or focusing on a wide or selected market segment. The differentiation strategy requires hotel management companies to distinguish their products and services based on key attributes valued by hotel customers such as location, design, or the experienced employees. On the other hand, hotel management companies employ the cost leadership strategy by maintaining low production costs by maintaining efficiency, high volume, and minimal overhead costs (Gamble, Thompson& Strickland, 2010). Essentially, the cost leadership strategy anchors on hotel management companies maintenance of cost-effective production.
Alternatively, to attain competitive edge, hotel management companies might embrace the focus strategy by pursuing specific market segments by adopting either of the other strategies. For instance, a hotel management company can focus on the upmarket segment by relying on differentiation to offer a stylish ambiance, and superior, luxurious products and services.However, a company operating diverse brands can utilize a combination of competitive strategies in its different business units (Gamble, Thompson& Strickland, 2010). For instance, a company with both business and prestige brands can use a differentiation strategy by providing exotic holiday locations for its prestige brand, and cost-leadership by offering inexpensive, full-service conferencing facilities for its business brand.
Given the complexity and competitive nature of the hospitality industry, a differentiation strategy is the best approach for achieving the competitive advantage of hotel management services. This is primarily because hotel management services seek to fulfill consumers social affiliation and identity needs, thus, customers are likely to patronize a hotel they perceive to offer unique and superior services than the competition. Furthermore, differentiation is a suitable strategy for hotel management companies as diversity in customer needs and desires offers vast differentiation opportunities (Olsen, West&Tse, 2007).However, differentiation can prove difficult, as imitation is easy within the service industry, resulting in similarities in brands. As such, effectivelydifferentiatinga hotel management companys services must focus on developing a superior and attractive package.
To differentiate itself effectively, a company should provide superior service experiences, which match the lifestyle of its patrons, and a brand that speaks to the desires of its customers (Olsen, West &Tse, 2007). A company that develops this package can consequently distinguish itself sufficiently such that it charges a premium rate that is acceptable to its market. In turn, this higher rate will handle the additional costs attributed to providing customers with uniquely superior experiences. For instance, the service company can offer complimentary services such as unlimited use of complimentary iPads, favorable workspaces, and delivery of exercise kits to guest rooms on request, to distinguish itself from competitors. Ultimately, benefiting from service differentiation centers on the companys capacity to appreciate customer aspirations and lifestyles and tailoring service offerings to meet these needs.
Gamble, A. A., Thompson, A.J., & Strickland, J. E. (2010). Crafting and executing strategy: The
The Quest for Competitive Advantage: Concepts and Cases (17th ed.). Boston: McGraw-Hill/Irwin.
Olsen, M. D., West, J. J., &Tse, E. C. Y. (2007). Strategic management in the hospitality industry.
(3rd ed.). New York City: Pearson.
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