Competitive strategies in the lodging industry
The business of lodging industry is a fragmented one as no single entity has a significant market share and no firm can affect significantly in overall industrys outcome. Its environment is hostile with slow growth and high costs pressures. Competitive strategies enable organizations to take challenges of environment and get the maximum from the opportunities at optimum level to give itself a competitive advantage over others.
Strategic archetypes are used in the research that is used by the firms to cope consistently with the environment. A summary of strategic typologies by the previous prominent researchers that are Mills and Snow, Porter, and Hall are given in the paper. Mills and Snow focuses on four broad categories namely, Defenders, Prospectors, Analyzers and Reactors and their respective characteristics according to their nature are given. When talking about the Porters research we find that he also has given four strategic typologies which are cost leadership, differentiation, focus and stuck in the middle. Each of their characteristics is given in detail. Hall made two broad categories that are lowest delivered cost and differentiation.
The study was carried out by mailing the questionnaire to top executive of 386 companies carrying the business of lodging in North America assuming each of the top management people is well aware of the strategies being followed by their respective company and the methods available to them. Asking from two other top managers of each company made it possible to check whether the information provided is similar.
Principle component factor analysis was used and it was determined that there appeared five distinct strategic configurations. The respondents were divided according to their strategic configurations to check which one is the most important factor in each based on mean squares. The factors considered were EfficiencyQuality Controller, Prospector-like, Internalized Resource Controller, Market Focused Analyzer and Geographic Focused Price Leadership. Do-it-All Differentiation, Narrow Focused Marketing Innovator, internalized Resource type Geographic Focused Price Leader types and EfficiencyQuality Controller types were the clusters being considered in the research. The heaviest cluster was Do-it-all differentiation containing 32 firms. Their respective strategic components were also given.
The paper discusses all of the cluster types in detail including the proportion of companies in them. The findings were then related to previous researches and some of them were in accordance with the past ones while others being contrary.
The evidences suggest that the number of strategic choices is limited. The EfficiencyQuality Controllers are in resemblance with Miles and Snows profile but this was for all except for motels with restaurants. Differentiation competitive strategy isnt evident. Do-it-all differentiation represents an adequate combination of cost leadership characteristics and prospector. It appeared that Narrow focused marketing innovator and geographic are focused towards price leader groups are variations of analyzer. But when components were analyzed many questions were raised. The results indicated that Do-it-all differentiation has a greater chance of successful competitive strategy. The efficiencyquality controller is appropriate where the previously discussed lacks. The other three were also adopted but after going through the study one can raise questions on their viability.
Thus we conclude that the most appropriate is Do-it-all differentiation in three of the four segments. These findings provide students and industry professionals with meaningful insights in terms of courses of actions when coping with competition.
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