V-R-I-O-S Framework Analysis

Using the criteria of the V-R-I-O-S framework model by Pitt & Koufopoulos (2012), we will critically identify and evaluate the different strategic assets and distinctive capabilities of Hilton Worldwide.

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Each element can be rated on a four-point scale:

A outstanding generator of value and advantage of genuine strategic significance.

B valuable, not a crucial source of advantage

C useful, but probably of declining significance

D already declining in significane and unlikely to be sustainable

Key:

V: value-creating potential

R: rarity

I: imitability

O: organizational appropriability

S: substitutability

Strategic Assets: Hilton Worldwide commands a global presence in 100 countries and territories on top of 4,610 hotels as of 2013 (HiltonWorldwide.com 2013). Its broad portfolio and brand reputation, particularly in the upscale luxury and mid-scale hospitality sector in the US is its strongest asset but could be beset by its rivals aggressiveness in innovating and adapting to changes according to customer preference. Alongside this asset, its strong international pipeline, strategic locations of its hotels, and exceptional employees, all rated indicate a strong value-creating potential for the company. But growth can sometimes be a deterrent to its value-creating efforts, such as the toll of its broadening pipeline, which could somehow hurt the quality of its branded hotels, which is part of the growing pains associated with growth. There is also the risk of brand cannibalism when new branded properties are introduced.

The rarity and imitability of these assets are bordering from being valuable to being rated useful all because the weight of their strategic significance are tempered by other strong competition in the hospitality and services market. In terms of the assets appropriability, the brand significance of Hilton remain unchallenged but will not be perpetually so considering that the wave of technological and service innovations in the sector are pushing the players to respond to threat of being substituted, such as from its rivals Marriott and Starwood as far as outlets are concerned (Euromonitor International 2013). Finally, it faces economic uncertainty and the prevailing socio-political unrest in some of the key emerging markets. Its rivals that offer prices lower and even satisfactory quality than its services may have a bigger advantage and win new and old customers of Hilton in this regard, which in the process leaving the hotel conglomerate with lower ranking in the substitutability factor.

Distinctive Capabilities: To ensure that the capabilities were identified as distinctive, this analysis invoke Pitt & Koufoloulos (2012), who both suggest that distinctive capabilities are unusually specific for a particular enterprise or market. In this regard, these capabilities that Hilton use to harness its resources and assets to create value are: a) service experience, b) service offering options, c) price, d) human resource quality and, e) compliance to global standards and practices. Hilton has improved and refined well its service experience through the years of its operations. The the pressure attached to its being a global brand leader in the hospitality market, which is what helped it create a unique value-creating core capabilities. Rated to be valuable to being useful all criteria of rarity, imitability and organizational appropriatability of service experience down to the Hotels management practices to adhere to global standards. All these aspects still have to be enhanced, improved and engineered to ensure that customers experience the best customer service when they checked in at Hilton than the companys rivals in the market. In terms of its price fairness value, Hilton will have to respond to demand from the market to offer buget brand in emerging markets it is eyeing to rate better in the criterias of rarity, non-imitability and substitutability. The companys HR quality is another distinctive capability that it can continue to improve, to help improve the level of its employees performance quality.

Recommendation

Recognized internationally for its differentiated hospitality portfolio, Hilton Worldwide should continue increasing its growth. Based on a Euromonitor market report about the company, Hilton grew by a third since 2007 up to 2012. Such profitability should be sustained and grow by another third through 2017 (Euromonitor International 2013). However, such will not be easily attained unless it fully understands its competitive potential, which is derived through a grasp of the sources of its competitiveness namely, strategic assets and distinctive capabilities. Based on the V-R-I-O-S framework analysis of the company, it was understood that the company still needs to make its presence felt internationally through increasing its branded hotel outlets.

Moreover, the country must uphold its global brand standard and best practices, which are among its key capabilities geared to improve quality. Service quality, processes, and HR quality will all continue to play big roles to increase the companys brand equity and reputation in these markets as it undertakes efforts in increasing its portfolio of services and pipeline. Furthermore, in an effort to increase its brand portfolio of hotel services and outlets internationally, it may have to assess establishing budget-friendly hotel or lifestyle brands in tourism-friendly locations like Europe. Another salient features of this recommendation to expand its global footprints is the long-term prospect for these countries to grow wealthier.

Albeit implementing a strategic plan seems easy on the paper, it is a prerequisite for a company operating on global scale with an ambitious bid to expand its international presence to adapt fast. Hilton is required to be both a healthy and a learning organization to become adaptable. This is in line with Reeves & Deimlers proposition about how organizations will benefit from sound strategic thinking (2011).

Works Cited

Euromonitor International 2013, Hilton worldwide travel and tourism (world), viewed 21

February 2016, http://euromonitor.typepad.com/files/hilton-company-report.pdfHilton Worldwide 2016, Corporate fact sheet: Hilton Worldwide: At-A-Glance, viewed 20

February 2016, http://news.hiltonworldwide.com/assets/HWW/docs/brandFactSheets/HWW_Corporate_Fact_Sheet.pdf

Pitt, M. & Koufopoulos, DN 2012, Essentials of strategic management, viewed 20 February

2016, Enterprise Resources and Distinctive Capabilities (pp.124160).pdf

Reeves, M. & Deimler M 2011, Adaptability: the new competitive advantage, Harvard

Business Review, viewed 21 February 2016,

https://cb.hbsp.harvard.edu/cb/pl/22461329/2309 7331/2858e515b0065b2c6233a7a69e18b8f9 (accessed:15/11/13)