1. The key element of strategy implemented by Shangri-La Hotel in gaining competitive advantage over its rivals is by offering services that are superior value worth paying more for. Shangri-la uses its signature standard of “Shangri-La Hospitality” in achieving an edge or competitive advantage over rivals in attracting buyers and coping with competitive forces.
A company’s competitive strategy deals exclusively with the specific of management’s game plan for competing successfully, its specific effort to please customers, its offensive and defensive moves to counter maneuvers of rivals, its responses to whatever market conditions prevail at the moment, its initiatives to strengthen its market position, and its approach to securing a competitive advantage vis-a-vis rivals. There are five types of generic competitive strategies that can be adopted by organizations to suit their strategic vision, mission and objectives.
In the case of Shangri-La Hotel, they are adopting the generic competitive strategy of focused differentiation strategy targeting a narrow market segment or market niche. Shangri-La Hotel as a leading player in the luxury hotel industry adopt a focused strategy keyed to differentiation aims at securing a competitive advantage with its signature standard of “Shangri-La Hospitality” a service model based on traditional Asian hospitality. Fulfilling the needs of a narrow and well-defined group of buyers.
The market niche of Shangri-La Hotel is the group of buyers with high level of income and buyer who prefer luxury services and standards. Shangri-La Hotel is a rapidly expanding international deluxe hotel rooms with 50 hotels across south-east Asia, Europe and North America and Bridle, and still expanding their market towards China. Shangri-La’s international strategy in fitting specific market conditions and buyers preferences is think-global, act-global approaches.
In expanding, its market worldwide which includes Asia, Europe and North America, Shangri-La still maintains it “Shangri-La Hospitality” during the expansion of their business. All of their hotels are luxury service hotel with distinctive Asian standards of hospitality and service. 2. A Shangri-La Hotel distinction feature from other hotels is its signature standard in their Asian traditional hospitality services provide for their customers. The service model of “Shangri-La Hospitality” has a stated mission which is to “delight customers each and every time. Its mission statement makes a clear picture of how they are focusing and prioritize its hospitality service to care and delight their customer in exchange for their loyalty. The core element of their distinctive service is to “offer customers an unforgettable experience by blending local cultures, exotic art, and lively ambience. Besides that, Shangri-La’s service model of “Shangri-La Hospitality” was built around five core principles which are respect, humility, courtesy, helpfulness, and sincerity. This five core principles are implemented across all their geographic and cultural markets.
In management perspective, Shangri-La used a five level organization design. In this practice, they divide its employees into five tiers which consist of Level 1(divisional managers), Level 2 (departmental manager), Level 3 (sectional managers), Level 4 (front-line supervisors) and Level 5 (front-line employees). Each of these tiers has their own separate guidelines, discretion and dollar amount that they could use. In order to maintain it signature standard in providing excellence service, Shangri-La has its own Training and the Shangri-La Academy.
It is first open in 2004 in China. It is their efforts in standardizing the delivery of its brand promise throughout its network of hotels worldwide. The Shangri-La Academy is equipped with full training facilities and varied from five-week to tree-month training programs. 3. Company training is the most important thing that needs to be considered of. Training programme for Shangri-La let their workers experience all types of job before they appointed to the next upper position. They will learn from the lower position to the top.
For example, Shangri-La provide their workers with Career Path and Development which few careers offer as much variety, and as many opportunities for training and advancement, as a career with Shangri-La. Not only that, many workers have travelled and worked all over the world, learning valuable new skills, and making lifelong friends, on the way. And the most of managers at Shangri-La today have progressed rapidly from junior positions. By having career growth programme, people at Shangri-La are encouraged to develop their skills and expand their knowledge continuously.
Everyone can take advantage of a wide variety of ongoing courses and seminars and workshops, on management, business, service delivery and leadership, as well as on specific technical skills. Shangri-La invests heavily in training, and offers a variety of programs for all levels, as well as their own training school, the Shangri-La Academy. Their aim is always to keep and reward the very best and each year Shangri-La fill most of the company’s management positions via internal promotions and transfers and, with over 50 projects in development around the world, which the opportunities are endless.
Not only that, Shangri-La also provide Core Programs which consists of Certificate in Culinary Arts, Certificates in Food and Beverage Service Operation, Certificate in Front Office Operation and others related to hospitality. According to the career growth that had been provide by Shangri-La, it showed that Shangri-La really concern on their workers and encourage them to improve themselves from time to time. As the time concern, these career growths will not be valuable if they are compensated with the small amount. Experience is not the thing that being considered by people who wants to live luxury in challenging world.
So Shangri-La supposed to aware of this and try to improve their salary scheme, bonuses or overtime premium for the sake of Shangri-La workers. 4. The key features of the culture at Shangri-La including their Philosophy, Vision, Mission, Core Service Value and Guiding Principles. These cultures are importance to the company success because it will produce workers who are competent and so, valuable to Shangri-La as a catalyst for their success. By implementing these cultures into their business operation Shangri-La is essentially practiced customer-oriented approach.
Shangri-La has their own philosophy which classified that their hospitality from a caring family. This philosophy is about made the guests feel special by bringing the core values to life. Hence, customers feel more appreciated by Shangri-La and thus will create loyalty among them. Vision that has been chosen by Shangri-La is to be the first choice for their guests, colleagues, shareholders and business partners. Shangri-la committed to delight everyone not only their customer but people from all walk of life.
By having a good relationship among these people then will let Shangri-La well-known and be the first choice while making a decision on hospitality service. In addition to that that is about Shangri La mission in the hospitality service where their wished to delight all customers or guests every time they use Shangri La services by creating engaging experiences straight from their heart. Then this explains that Shangri La workers well trained to deliver heartfelt services to their customers and keep their customers delighting from time to time.
Shangri-La core service values are about respect people not only customers but colleagues, shareholders, business partners and so on. By practicing respects into behaviors of workers will automatically creating humility which will make them more concern on each other’s and build up courtesy and sincerity while give a hand to customers and people. There are several guiding principles that lead for Shangri-La’s success and it is such a secret recipe for them to create success for such a long time and become well known like today.
The guiding principles that being the key features of the culture at Shangri-La are ensure leadership drives for results, guest loyalty is a key driver for their business, committed to the financial success of their own unit and of our company, create an environment where Shangri-La colleagues may achieve their personal career goals, enable decision-making at the guest contact point, demonstrate honesty, care and integrity in all relationships, ensure policies made and processes are guest and colleague friendly and the last is remain deeply committed tosocial responsibility by making a positive contribution to communities, environment, colleagues, guests and business partners. Shangri-La mission statement typically provide a brief overview of their business purpose on Care Programme structured which gives their workers all the skills needed to turn passion into a success. When this mission statement in line with the Care Programme organized, then it will make the programme as a platform in achieving the culture practiced at Shangri-La.
For instance, care programme held by Shangri-La is about enhancing skills and cultures needed in Shangri-La is such as respect, humility, courtesy, helpfulness and sincerity that represent core service values of Shangri-La. 5. What core/distinctive competencies has management at Shangri-La tried to build and nurture? What challenges does the company face as the attempts to transfer its core and distinctive competencies to other cultures? How has the company attempted to resolve these challenges? Formulating strategies focuses on matching the resources and capabilities of a firm to the opportunities arising from the external environment. The ultimate aim of volving and implementing strategies for a firm is to attain sustainable competitive advantages. Therefore a resource based view suggests that a firm has to use its available resources and capabilities for garnering distinctive competitive advantages which enables the firm to add value for the firm. Value can be defined as what customers assign to a product based on its attributes. A competitive advantage can become a distinctive one when it allows the firm to differentiate its products. Although all the resources and capabilities are important to an industry, the firm has to identify the important ones based on the factors that make them useful for the firm to become successful.
The firm has to organize its resources and capabilities based on their relative importance and compare them with those of the competitors. This process will enable the firm to identify its strengths and weaknesses which can be manipulated intelligently to achieve sustainable competitive advantages. Based on this theoretical approach Shangri-La has developed various essential and unique resources as well as essential and core competencies. Developing a positive reputation in the market much higher than that of its competitors and the establishment of a solid customer base can be considered as the distinctive competitive advantage of the Company.
In order to remain competitive the company relies on its unique resources such as cohesiveness in its operations among different operating segments and higher morale and motivation among the employees through the training which leads to higher level of job satisfaction to the employees. The core competencies include the maximization of brand value or service value to the customer and employing target based approach to achieve the business objectives. 6. What does the company’s financial and operational performance reveal about how successful its strategy and strategy implementation effort have been? Should shareholders be pleased with the company financial performance? Why or why not? What financial and operating performance plusses and minuses do you see? Financial and Operational Performance
Shangri-La has a well managed financial system which takes care of the operations of the Company to be carried out efficiently. Because of the efficient financial management practiced in Shangri-La the investors had the motivation to invest more in the shares of the Company. The large investments are used by the Company for new projects and expansion of existing projects to add more value to the shareholders. The new facilities provide added competitive strength to the hotel. 7. What challenges does Shangri-La face in expanding into Eastern China? Do you believe the company’scurrent polices and operating procedures will be sufficient in addressing these challenges? If so, why?
If not, what else may need to be done? Shangri-La issues that presented challenges in expanding into Eastern China when the company was expanding its presence in China –a country where front-line employees were not used to exercising decision-making authority; newcomers in Chinese Hotel market were poaching Shangri-La’s staff and driving up wages in historically low-wage markets. They provided training program and give opportunities to competitors. In others, local Chinese managers with fixed cultural issues were unwilling to delegate and give up their perceived authority. The current policies and operating procedures are not sufficient in addressing these challenges.
In order to provide distinctive Asian standards of hospitality and services, when guests travel constantly, they are not easily impressed by hotels and have no patience for pretentious or poor service. However, if the service and comfort issues are handled well, guests start to really appreciate on Asian unique design. In China, they were very good in performing their duties based on the restricted guidelines. So, Shangri-La should confine the policies on resigning and mix their employers with other races in order to gain knowledge of other cultures. Other employees benefits should be consider not just based on salaries. Marketing Position in China Shangri-La had to face stiff competition in China due to the open market economy and liberal economic policies of the Government which enabled a number of new entrants to the market.
The availability of more hotels has increased the bargaining power of the customers and the suppliers also increased their bargaining power making the operation of Shangri-La difficult. Another disadvantage faced by Shangri-La is that most of its facilities are deluxe ones having more tariff than the competitors. Since most of the travelers are business travelers they prefer to stay in budget hotels rather than deluxe rooms. 8. How do the challenges associated with Shangri-La’s expansion into Europe, Australia, and North America compare with the company’s expansion in China? Do you believe the company’s current policies and operating procedures will be sufficient in addressing these challenges? If so, why? If not, what else may need to be done?
The challenges associated with Shangri-La’s expansion into west countries were expanding into high wage economies in Europe and North America and also short supply of trained hotel staff. Translation of new hotels in new market for signature Shangri-La quality and service standards is important. The first impression on guest experience is essence of Shangri-La. So, they will not consider the option in charging more for rooms for new high-wage markets since pricing is dictated by market. Compare to China; rate for wages are low and also surplus of labor, consider as advantage for them but difficulties faced on retaining their trained employees because competitors tend to offer more salaries compare to Shangri-La. The policies and operating procedures are not sufficient in addressing these challenges.
They should expose their employees on long-term effect and show appreciation. For example, recognized their performance. 9. How big a threat does the expansion of other hotels chains into China pose for Shangri-La Hotels? What specific challenges are likely to arise as a result of this expansion? How should Shangri-La address these challenges? The big threat on expansion of other hotels is well known western hotels started to pop up all over China. For example Regent, Ritz-Carlton, Hyatt, Sheraton and others. Employees are one of the most important resources in order to maximize growth. As we all know, China was known as low rate of wage compare to other countries.
The challenges are the shortage availability of professional or skills employees and also the difficulties to retain the employees from other competitors, in order for them to stay with Shangri-La Hotels. So, if there is no professional involvement in decision making in representing Shangri-La, it may be impossible to maintain services to satisfied guests. In order to avoid this situation, they should overcome wage issues and offered more services compared to competitors. (For instance, wellness experience coupled with cultural activities that give one an insight to the unique heritage of Asian) 10. What recommendation would you make to Symon Bridle to improve Shangri-La’s prospects for continued success? Competitive advantage enables a firm to outperform rivals on profitability.
Innovation and responsiveness to change are the bases on which competitive advantages can be developed. Competitive advantages to remain sustainable should meet the criteria of being unique, difficult to replicate, superior to competition, sustainable and applicable to multiple situations. In order to sustain its growth and profitability Shangri-La should open more budget hotels exclusively for business travelers offering the same level of quality in the service. The Company can offer additional facilities of promotional stays and discount offers based on an alliance with the airline companies, linking the stay in Shangri-La with frequent flying in certain airlines.
