Four Seasons Hotel Case Study Essay
Four Seasons Hotel Case Study
A company’s strategy can be identified by figuring out what business approaches and actions the company undertakes. Thompson et al. (2009) outline the key elements to look for in the process of understanding a company’s strategy. Four Seasons’ differentiation based focused strategy is evident from the organisation’s strategic actions. Sharp’s decision to build on high-end luxury and modern amenities so as to outdo the old grand hotels (p.3, para.3) is an example of efforts to pursue new opportunities or defend against threats as well as actions to outcompete rivals, which provides basis for differentiation.
By focusing on medium-sized hotels of exceptional quality with exceptional service levels (p.3, para.3), Four Seasons defines the business scale and differentiates itself from competitors through providing superior quality and service. This is one of the moves to build a competitive advantage thus outcompeting rivals. The action to go public to raise funds (p.3, para.4) is a response to changing external circumstances, which supports the business growth and paves the way for Four Seasons to be the market leader. In order to serve diverse needs of the customers, Four Seasons extends into the fields of luxury resorts (p.4, para.1) and residential properties (p.4, para.4).
With such action to diversify, it enables Four Seasons to serve a market niche. An example of actions to merge or acquire rival companies is the ownership acquisition of Regent (p.4, para.2), and a strategic alliance is formed via selling stake to Prince Alwaleed (p.4, para.4). By doing so, Four Seasons improves its competitive position as the market leader. The shift of focus from ownership to management services (p.4, para.3) reflects Four Seasons’ efforts to pursue new opportunities or defend against threats and its responses to changing external conditions. The business model of Four Seasons is defined by this strategic shift.
The regional management structure (p.5, para.4), the finalisation process of budget plan (p.6, para.2), the human resource management (p.8, para.3), and the recruitment policy (p.8, para.5) are examples of how functional activities are managed in Four Seasons. By optimising functional activities, it enables improved quality and customer service provided. Four Seasons’ actions to alter geographic coverage lie in its international expansion program (p.7, para.3), which enables business growth by reaching new markets and new customers.
The distinctiveness of properties that reflects the local culture (p.8, para.1) is another example of actions to diversify, which leads to differentiation. The actions to strengthen resources and capabilities that support quality and customer service improvement include the training and development programs (p.9, para.1) and the new initiatives to offer added convenience to guests (p.10, para.2). By linking the actions with the strategy, it can be summarised that a company’s strategic actions are driven by the strategy it employs (Thompson et al., 2009).
Strategic Fit with External Environment
Strategically relevant influences from the external environment can have a significant impact on the company’s strategy. Therefore, the strategy that the company employs must be responsive to the external environment (Thompson et al., 2009). The external environment outside Four Seasons affects its strategy in many aspects.
The events such as the Iraq war, the September 11th attack and terrorism impact the hotel industry significantly, which lead to decreased profitability. As a response to the circumstances, Four Seasons dedicates to international expansion. Through wider geographic presence, it allows Four Seasons to make more profits in the areas that are less impacted thus enhancing the overall profitability. Amidst these challenges, Four Seasons manages to maintain its position as the market leader, which owes to its globalisation strategy.
As one of the largest factors that shape the strategy of Four Seasons, the economic recession pulls down the luxury hotels’ business and poses crisis for Four Seasons. It is no longer profitable to build and own hotels. As a result, Four Seasons shifts its focus from hotel ownership to hotel management services so that the financial risk is mainly borne by the hotel owners. Through management operations, Four Seasons is able to make the best use of its expertise and provide exceptional quality and service to the customers, thus gaining a competitive advantage over rivals.
The trend of increasing international travel both in business and leisure markets creates more opportunities for the hotel industry. In order to better serve the travel needs of its existing customers and attract new international travellers, Four Seasons continues to expand its geographic coverage by adding five to seven hotels per year to key destinations, thus capitalising on the emerging opportunities. In response to the changing lifestyle of the global travellers who want personalised service, Four Seasons constantly innovates new ways to make business travel more efficient and leisure travel more enjoyable. By doing so, the differentiation strategy through superior customer service is enhanced.
In support of the rapid development of information technology, Four Seasons enhances its management services via operating a central reservations system, recommending information technology systems and developing certain database applications. It enables Four Seasons to be more profitable through optimised management services.
The nature of the leasehold agreement with three properties makes it difficult to sell the ownership and shift to management services, which results in adding losses to Four Seasons accounting. It reinforces Four Seasons’ decision to concentrate on management operations. In order to reduce the impact of these properties, Four Seasons continues to seek ways to improve the operating profitability.
To follow the major trend of being environmental friendly, Four Seasons initiates recycling programs for glass, paper and other biodegradable garbage, in support of its uncompromised customer service. Such approaches help Four Seasons maintain its leadership position in luxury hotels.
Strategic Fit with Internal Environment
A comprehensive evaluation of a company’s resources and capabilities reveals the strengths and weaknesses in the present strategy so that adjustments and improvements can be made (Thompson et al., 2009). Four Seasons’ strategy facilitates the decision making on its internal activities in different ways.
Four Seasons focuses on the market niche of luxury hotels. In order to better serve the diverse needs of the focused customers, Four Seasons extends into the fields of resorts and residential properties so that the customers who use the hotels can enjoy the same quality in resorts and residence clubs. By retaining the customer base and competing in different segments, Four Seasons is able to maintain its position as market leader.
One of the strengths of Four Seasons is the attractive locations of its properties. With business and leisure travellers as the target customers, Four Seasons locates its hotels centrally in the commercial and financial districts of the world’s leading cities, while resorts and residential properties in world-class leisure destinations. It allows Four Seasons to attract more potential customers with its location advantage that are unmatched by rivals, thus gaining a competitive advantage.
One major distinctive competency of Four Seasons is the exceptional customer service, which is delivered by its valuable human assets. The human resource management at Four Seasons makes sure that its employees treat the guests as they would wish to be treated. With high staff morale and high employee satisfaction, Four Seasons’ customers can expect the best possible customer service. Through the training and development programs, Four Seasons equips its employees with advanced skills and expertise.
As a result, the employees are able to deliver services above desired standards while carrying out innovative solutions to solve customers’ concerns. With these highly trained and professional staffs, Four Seasons stresses ways to differentiate itself from rivals through superior customer service.
The expertise in hotel management is another competitive capability of Four Seasons. In order to make the best use of its expertise, Four Seasons concentrates on hotel management operations. To improve the operating profitability, Four Seasons engages in every aspect of the hotel operations on behalf of the owners, even before the hotel is built.