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Maha Abdullatif Abutalib, 2012

Abstract

This paper aims at discussing and evaluating the strategic management of Four Seasons

Hotel and Resorts current situation and future position and development. This research report

identifies the sources of competitive advantage for Four Seasons and strategic challenges

faced by the company on its expansion plans. The paper adopts some management models to

help better understand the current situation. PESTLID and Porters five forces help to

understand the current challenges facing the company from the perspective of the hospitality

industry.

Introduction

As the worlds leading operator of luxury hotels and resorts, the goal of Four Seasons is

to offer affluent business and leisure travelers the finest hospitality service in each destination

it serves. To this end, the firm has achieved enormous success in the past 45 years.

Nonetheless, to achieve a sustainable competitive edge in the hospitality industry, Four

Seasons must know it competencies as well as its threats. Profound understanding about these

issues could help Four Seasons to manage its business more effectively, efficiently, and more

successfully. The aim of this case analysis is to serve as an impartial appraisal of Four

Seasons strategic management.

Competitive Advantages

Source of competitive advantage

Four seasons source of competitive advantage emanates from personal service. Four

Seasons competitive advantage allows it to better serve customers more than competitors,

hence create a better customer value and achieve superior performance.

Dynamic capabilities
Maha Abdullatif Abutalib, 2012

The sustainability of these sources of competitive edge depends on their dynamic

capabilities to match the requirements of ever changing hospitality environment and

discourage imitation from competitors.

Distinctive value

Four Seasons has a strong brand and reputation resulting from the distinctive value that

the customer perceives as premium and is willing to pay more. According to Michael Porter,

competitive strategy involves performing business activities in a unique way.

Internal integration

Four Seasons has a road map highlighting that all function including training,

marketing, financial, procurement, among others focus on supporting the strategic position of

the firm.

Aligning with human resource strategy

The sustainable strategy of Four Seasons is strongly aligned with human resource

strategy. To ensure this, the company shapes recruitment criteria to ensure that they select the

right employees that meet the demanding requirements of customers. On the other end, Four

Seasons human resource policy provides specification for job design, training, performance

evaluation, remuneration, and career opportunities necessary to nature and retain good

employees. The companys human resource strategy has resulted to less staff turnover of

about 24%, a figure less than half the luxury segment average (Marler, 2012).

Continuous learning

Four Seasons continuously engage in learning, replenishing, and widening its

specialized management knowledge of luxury hotels, and constant honing the routine

capabilities and skills for the changing hospitality environment.


Maha Abdullatif Abutalib, 2012

Forces shaping the hospitality industry

The company focuses exclusively on the luxury segment of the hospitality industry.

Porters five forces analysis provides a useful model to identify the dynamic forces shaping

the hospitality industry, and how these forces influence Four Seasons.

The company focuses exclusively on the luxury segment of the hospitality industry.

This customer segment put more emphasis on quality of services rather than price. The

consumption preference of these guests dictates that they are not price sensitivity and will not

sacrifice the service quality for low price. This implies that the effects of substitutes from

mass hotels are not obvious to Four Seasons.

Concerning supplier power, Four Seasons conducts a mass procurement at all its hotels

in order to ensure uniform quality while controlling the operation cost. Operating such

centralized procurement system reduces suppliers advantage. Another group of suppliers

includes potential employees. Four Seasons attract potential employee with its reputation and

performance-related three P initiatives. In real sense, suppliers power is relatively low.

The treat of new entrants is relatively low to Four Seasons due to high barriers to entry.

Those barriers include capital and time required to develop a well-established and respected

luxury brand name. Additionally, obtaining management contracts for luxury properties

proves difficult to new entrants due to lack of enough confidence among developers.

The major challenge to Four Seasons includes competition from established luxury

hotels and the buyer power. Four seasons handles these challenges by investing on how to

differentiate with competitors and meet the expectations of customers and shareholders.

Industry rivalry
Maha Abdullatif Abutalib, 2012

There is high level of rivalry in the luxury segment for customers and acquisition of

new management agreements. Specifically, competition for customers arises from luxury

hotel chains such as Starwood, Ritz, and Leading Hotel Group. Rivalry among competitors is

mainly based on brand recognition, room rates, location, quality of service, and

accommodations.

Power of buyers

Since Four Seasons focuses on management of hotel and resort properties, its growth

opportunities depend on its ability to establish and maintain sustainable strategic relationship

with new and existing owners. The factors that influence property owners decision include

the quality of management services and the benefits gained by hotel owner for retaining Four

Seasons brand image and management services. Four Seasons raises the confidence of

property owners by its specific performance criteria, which assures propertys yield to be

among the top three in the local market. Owners may cancel the contract if the criteria are not

met within a given duration.

Differentiation strategy

In order to forge a head of competition, Four Seasons must intensely consider what it

has, what it can do, and what it can achieve. Four Seasons focuses on organic growth of its

core business, which involves enhancing its overall position in the industry as well as

ensuring the overall profitability through international expansion program.

Differentiation focus

Building on its excellent management experience of luxury hotels and exceptional

management team, Four Seasons follows a focused differentiation strategy (Ivanovic, &

Blazevic, 2009). Such strategy serves to reduce the bargaining power of consumers and
Maha Abdullatif Abutalib, 2012

reduce competition. Four Seasons use of personal service serves as a source of superior

quality, brand reputation, and growth. Long-term strategy that Four Seasons should consider

involves further enhancing perceived value to charge a premium price for this benefit and

reduce the perceived cost in order to increase margin as displayed in figure 3. Even though,

achieving hybrid strategy may prove difficult, it provides the only suitable way for Four

Seasons to remain superior to its competitors.

Conclusion

Luck always follows the prepared. Four Seasons success is a continuous effort. It is the

result of a long-term sustained effort to achieve and maintain a distinctive excellence over

competitors. At the center of Four Seasons excellence is the precise translation of its strong

brand into successful strategies that can deliver customer benefit.


Maha Abdullatif Abutalib, 2012

Bibliography:

Garrett, T. & Gray, B., 2005. Service product development for sustainable advantage: the use
of the source-position-performance model. Available at: < anzmac.info/conference/2005/cd-
site/pdfs/5.../5-Garrett.pdf> [Accessed 2 December 2012].

Ivanovic, S, & Blazevic, M 2009, 'Human resource management in the hospitality industry',
Tourism & Hospitality Management, 15, 1, pp. 107-116, Hospitality & Tourism Complete,
EBSCOhost, viewed 2 December 2012.

Lima, T, 2006. Michael Porters five forces model: summary and interpretation [pdf]
Available at: < www.cbe.csueastbay.edu/~alima/.../fiveforcesporter.htm> [Accessed 2
December 2012].

Marler, JH 2012, 'Strategic Human Resource Management in Context: A Historical and


Global Perspective', Academy Of Management Perspectives, 26, 2, pp. 6-11, Business Source
Complete, EBSCOhost, viewed 2 December 2012.