Strategy Assessment in a Competitive Market: An Analysis of Key Strategic
Elements in a Turkish Hotel
Competitive Strategy Generation to Create Future Proof Business for Hotel Flamingo Istanbul
Author: Mahmut Mete Şalgamcıoğlu
Student Number: 11352841
Name of the Supervisor: Stephan Von Delft
Contact: msalgamcioglu@gmail.com
1
ABSTRACT
Successful strategy formulation and understanding the importance of different elements enable companies to have competitive advantage and diminish the effects of uncertainties in politically unstable and competitive environment by setting a clear direction and enabling them to achieve their goals with the optimum usage of key strategic elements. Re-visiting these key elements, analysing them, and making updates in the content of current strategy is an effective method to sustain competitive position for any company.
EXECUTIVE SUMMARY
Tourism sector of Turkey is in struggle in recent years as the result of political problems that arose both from internal affairs and its relationship with neighbour countries. Situation caused decline in tourism income from 31,4 billion USD to 22,1 billion from 2015 to 2016. 1st quarter
result of 2017 is also 696,6 million USD below of 2016’s1. Starting from seaside regions, all
players in industry are affected to different degrees. Hotel Flamingo (HF), company which is subject to this in-company project report, is a four-star, middle segment hotel that operates in Istanbul, Turkey under these changes in the external environment which also caused its customer numbers to drop significantly. Thus, company’s current strategy requires re-evaluation to improve its key strategic elements which will help it to have a competitive advantage and diminish the effects of these externalities by giving a clear direction. So far HF has always considered market as its priority and positioned itself accordingly which needs some changes since competitors also have not seen such externalities and don’t know how to act. Through the report, knowledge gained from interviews, on-job observations, and statistical results about the performance of the tourism industry in Turkey are used to analyse current strategy, assess it, and make recommendations in a systematic way with the combination of literature and frameworks available related to the subject. Thus, outcome includes updates in strategy plan of HF. Introduction part covers motivation behind the project and brief introduction of company. In literature review part, articles that specify important elements in strategy will be discussed. Later, strategy sketch that covers these elements is introduced as the main framework and applied. Afterwards, assessment of strategy is done, recommendations and their implications are explained accordingly, limitations for the report are stated, and conclusion is made.
2
TABLE OF CONTENTS
Abstract / Executive Summary.…... 1
I. Chapter 1 – Introduction... 3
A. Background... 3
B. Brief Introduction of the Company..……….………. 5
C. Research Objective………. 5
D. Research Methodology……… 6
E. Framework and Expected Outcomes………. 6
II. Chapter 2 - Literature Review... 7
III. Chapter 3 – Strategy Framework... 14
A. Resources & Compentices... 15
B. Partners... 20
C. Customers & Needs... 23
D. Competitors... 24
E. Value Proposition... 26
F. Revenue Model... 26
G. Risks & Costs... 28
H. Values & Goals... 28
I. Organizational Climate... 29
J. Trends & Uncertainties... 29
IV. Chapter 4 - Strategy Assessment... 31
V. Chapter 5 - Implications/Managerial Recommendations... 39
VI. Chapter 6 - Limitations and Conclusion... 46
A. Limitations……… 46
B. Conclusion……… 47
VII. Chapter 7 – References... 48
A. Articles/Theoretical Frameworks... 48
B. Websites... 49
3
I. CHAPTER 1 - INTRODUCTION
Firstly, background information related to the tourism sector in Turkey and brief introduction of the company are provided. Afterwards, industry effects on the company that consequently created the need for re-evaluation of key strategic elements in current strategy to have a better future competitive position is explained. Lastly, the methodology, framework and the expected outcomes are indicated.
A. BACKGROUND
Tourism sector in Turkey is facing a significant decline in tourist arrival numbers (-31%)2 as the
result of recent political unrest and terrorism in the country. Incidents, including various terrorist attacks from bombings and ambushes to murders, political disagreements with countries like Russia which is a tourist source especially for the summer time, and coup attempt that took place in 17/07/2016, caused a drastic decline in the number of tourists that visit the country. To be more specific, tourist number of 12/2015 which is 36,244,632 declined to 25,352,213 in 12/20163. Latter number also includes the time which is before the start of
the incidents so that pre-planned and locked contracts, which had not been cancelled due no refund policies, are also part of these results. Although political unrest and incidents seem to be losing their significance recently, numbers at the end of 2017 are expected to be lower than previous year as result of incidents’ psychological effects, which will continue to be present for some time, on people.
Fig. [1] – Development of Tourist Numbers that visited Turkey
2http://www.pwc.com/gx/en/hospitality-leisure/assets/european-hotels-forecast-report-2017-2018-web.pdf 3http://www.tursab.org.tr/tr/turizm-verileri/istatistikler/turist-sayisi-ve-turizm-geliri 0 10.000.000 20.000.000 30.000.000 40.000.000 50.000.000 2010 2011 2012 2013 2014 2015 2016
Number of Tourists
4
When we look at the historical progress of the number of the accommodation companies in Turkey, considering the official numbers4, we see that it has a steady increase through the
years with an average of 4.7% per year as the result of increased popularity of historical places, reasonable price/performance measures (effect of currency exchange rates also boosted this measure for foreign tourists) and attractions of seaside cities in summer time. Dramatic decreases in the number of tourists in recent years also decreased the industry revenue and made it even more difficult to get by since supply happened to pass demand vastly. This situation caused lots of accommodation companies to re-visit their business strategies.
Fig. [2] - Development of number of Accommodation Service Providers in Turkey
Fig. [3] - Development of Tourism Industry Revenue in Turkey
4 http://www.tursab.org.tr/tr/turizm-verileri/istatistikler/turistik-tesis-ve-isletmeler/turkiyenin-yatak-kapasitesi-1966-_77.html 0 1.000 2.000 3.000 4.000 5.000 2010 2011 2012 2013 2014 2015
Number of Accomodation Service
Providers
0 2.000.000 4.000.000 6.000.000 8.000.000 10.000.000 12.000.000 14.000.000Tourism Industry Revenue of Turkey
('000 USD)
5
B. BRIEF INTRODUCTION OF THE COMPANY
Hotel Flamingo, which is the commercial name of the middle-sized Hotel that is subject to this in-company project, is a family-owned hotel that operates in the environment described above. Name of the family company, which bought Hotel Flamingo in 1997, is Şalteks Şalgamcıoğlu Teks. Tic. Turizm incorporated company which is located in Aksaray, Istanbul, Turkey. Father owns 90% of the shares and still controls the operations and middle son has been working with him for almost 7 years. Although the father is the CEO, he mainly only provides guidance and son is the one who actually runs the Hotel’s activities.
There are 2 buildings that are owned by the company. The main hotel building is a 4 star-hotel with 8 floors, 80 rooms and a restaurant at the top floor. It serves breakfast in the morning that is included to the price and serves dinner by order with an extra charge like most of the competitors in the market. Second building block which is consisted of 28 flats is located just behind the main building and mainly preferred by large families for flats’ size and solidarity. They are operated like hotel rooms with higher prices. Company has 22 employees like indicated in the below table and all of them are in its payroll.
Title Receptionists Service Employee
(Lobby) Cook
Cleaning
Ladies Total
# of employees 3 8 1 10 22
Table. [1] – Employee allocation of Hotel Flamingo
RESEARCH OBJECTIVE
The issue that company faces is aligned with the industry as the drop in the number of customers. Consequently, their managerial issue includes improvements of key strategic elements to change this outcome for the favour of Hotel Flamingo. This will also help Hotel Flamingo to have a better future-proof stance by directing its resources to more crucial strategic elements. Thus, this process will differentiate Hotel Flamingo from other mid-sized hotels in the area with lower cost/quality, more stable customer base, better understanding of various stakeholders, and by realizing how to exploit its resources and competencies.
Comparing the utilization rate of Hotel Flamingo between 2015 and 2016, we see a drop from approximately 82% to approximately 68%. When we look at the current year’s utilization rate,
6
we see that it’s around approximately 55%. Also, considering that supply is much more than demand in the current market, this situation calls for the need for re-evaluating the current strategy since competition to survive is going to be tougher. Considering the family-owned structure of the company with small percentage of marketing expenditures in total expenditure, using its current resources in an optimum way is a crucial aspect in the process.
C. RESEARCH METHODOLOGY
Data and information collection process is a mixture of both secondary research data and qualitative research data. According to Crouch (2003, p.41), secondary research is "the summary, collation and/or synthesis if existing research". They may be extracted from resources that are both external and internal to the company. Information sources can be surveys, reputed publications, market research organizations, books, and educational establishments. In this paper, secondary data are articles, a book, hospitality market analysis reports and data available from inside the company to upgrade the current strategic elements.
Qualitative research is based on understanding the nature of the business in on-the-job setting that also includes the perception of managers and employees toward the business (Denzin and Lincoln (2011)). Therefore, qualitative research method makes data “real, rich, and deep” as argued by Cohen (2007, p.105). Data gained from interviews with 2 top managers, receptionists, customers, and on-job observations are main qualitative research inputs.
D. FRAMEWORK AND EXPECTED OUTCOMES
Literature review part focuses on key strategic elements that needs to be considered in a well-structured strategy. In the framework application part, all key strategy elements that are presented in the framework are re-visited. However, elements that are most critical for the company are analysed more in-depth and strategy checks, which are also part of the framework, are done to assess identified strategic elements and improve the quality of recommendations.
Main framework for the strategy generation will be ‘Strategy Sketch’ from Kraaijenbrink’s Strategy Handbook (2015) that covers 10 key strategic elements which are similar for every company and required in a strategy for a systematic approach. Thus, the framework helps to
7
analyse any company in a holistic way and analyse these elements’ effects on each other. Key strategic elements which are defined in the framework are 1) resources & competences, 2) Partners, 3) Customers & Needs, 4) Competitors, 5) Value proposition, 6) Revenue Model, 7) Risks & Costs, 8) Values & Goals, 9) Organizational Climate, 10) Trends & Uncertainties. Partners element also includes Stakeholders. After assessments of the elements and strategy checks, expected outcomes include re-visit of strategy elements that are found to be critical for HF.
II. CHAPTER 2 – LITERATURE REVIEW
Kraaijenbrink (2015, p.18) defines strategy as “a unique way of sustainable value creation.” Thus, strategy generation has been the essence for creating a competitive advantage. There are many sources explaining why companies need it, it has different definitions and there are various elements that are required to be successful. Although each element has different importance for different companies according to what is wanted to be achieved, general structure contains core key strategic elements that are needed to be considered.
Mitzberg (1987) suggests that a good strategy enables companies to set direction, focus on efforts and promote coordination of activity, define organizations by giving them meanings and provide consistency which all help under uncertain and competitive environments. It is crucial to perform better than other players in the industry and setting direction helps companies to achieve this objective by enabling them to “do the right thing” which is more critical in the strategy generation parts compared to “doing things right”. (Mitzberg, Henry 1987 p. 26). Thus, focusing on efforts provides company the ability to act more collectively through the organization and enable it to be more efficient in its application with the set direction. Consequently, these elements enable companies to be consistent in certain times, and be somewhat consistent in uncertain times with the collective direction in mind. Therefore, it enables companies to set realistic goals and boost them to act on it. In addition, it also helps outsiders to identify the company which is important to get the attention of the possible investors. However, article does not really touch to the main strategic elements that will enable strategies to be effective. Main discussion is limited to the positive effects of sound strategies on companies. Therefore, more exploration about these key strategic elements,
8
which are also part of the strategy sketch, is needed and these are discussed in the following articles.
Defining or realizing the strategy type can be considered as one of the initial steps for formulating a strategy since it shapes how companies behave during strategy generation or re-evaluation of current key strategic elements. Mintzberg and Waters (1985) define several strategy types which are differentiated from each other mainly according to the structure of the company, effect of individual managers and environmental effects. Strategy types take place on the deliberate-emergent continuum and include; planned, entrepreneurial, ideological, umbrella, process, unconnected, consensus, and imposed strategies. (Mintzberg & Waters (1985)) However, in real life companies mainly have combination of these types according to the decision that needs to be taken since externalities cannot be fully predicted beforehand. Even If a planned strategy is applied, environment can force companies to act in entrepreneurial form if quick responses are required. Therefore, distinctions between these types should not be considered bold but needs to be understood under different circumstances to understand companies more in-depth. While decisions that are less complicated and which are less affected by the external environment are near to the deliberate side of the continuum, others that are affected by externalities and require quicker responses which are mainly, not necessarily, decided by top managers are closer to the emergent side of the continuum. (Mintzberg & Waters (1985)) Thus, organizational climate, which is part of strategy sketch, that is affected by these characteristics of companies is an important element that needs to be considered as it affects companies’ ability to respond and make decision.
Similarly, Campbell & Alexander (1997) suggests that having a well-defined purpose that does not change time to time or situation to situation, understanding how to create more value than other companies by keeping data, and interpreting that data to create actionable insights are important success factors. These are crucial components since they affect the value proposition element of companies by showing what they are capable of. Campbell & Alexander (1997) also focus on clearly defining purposes and constraints in the strategy to have better customer insights, and emphasize the linkages between stakeholders like suppliers, customers, shareholders, and employees and competitive advantage as an important factor that can be in both constraint or purpose part in strategy since some of them
9
needs to be present at least to minimum level while others can identify the purposes of companies. This shows that having focus on specific stakeholders in strategy to achieve a certain vision can affect value proposition, goals, revenue model, relationship management, and resource allocation. While article puts emphasis on stakeholders to be more competitive in the market, it also highlights the importance of differentiating among them according to their benefits to companies. However, it doesn’t present a methodological way to realize this process which leaves process to experiences of professionals after giving the main idea.
In addition, Campbell & Alexander (1997) argue that identified clear purposes are long-term aims that needs to be filled with short-term objectives to have better strategy. Thus, strategy formulation / re-evaluation and strategy implementation should not be strictly separated from each other since upper level strategy is mainly done by upper management and implementation is done by employees so that each side has their unique knowledge that needs to be collectively considered. Therefore, having practical implementation methods in mind, if not meticulously planned based on frameworks, while considering the abilities of companies can be useful in the process so that strategies which cannot be implemented will not emerge.
Focusing more on the importance and methodological differentiation, which lacked in the previous article, of stakeholders in strategy, Ronald, Bradley & Donna (1997) propose 3 characteristics of stakeholders as power, legitimacy, and urgency. Afterwards, they group stakeholders under 8 different categories like in the below figure according to the number of characteristics that they have as dormant (only power), discretionary (only legitimacy), demanding (only urgency), dominant (power + legitimacy), dangerous (power + urgency), dependent (urgency + legitimacy), definitive (power + urgency + legitimacy) and non-stakeholders. Since stakeholders are any party (employees, suppliers, government, customers, etc...) that affects or get affected by the actions of the company (Ronald, Bradley & Donna (1997)), identifying stakeholders clearly according to their importance is vital for managers in the process of strategy re-evaluation. Thus, it provides companies the ability to map and assess their networks in a broader point of view and direct their efforts in a more optimum way to achieve competitive advantage. However, these categories can be interpreted differently for the same companies by different people since suggested characteristics in the article can be subjectively interpreted. Therefore, having a clear vision
10
and mission and communicating them clearly is vital to minimize these differences. In addition, although article discusses their salience, it does not discuss how to evaluate their effectiveness which can be filled with practical tools like carter’s 10 Cs of supplier evaluation5
,which can also be used for stakeholder evaluation, or network value system that emphasizes the benefits that stakeholders get from each other and try to change them in favor of the subject company. (Kraaijenbrink, J. (2015)) In conclusion, emphasis on stakeholder is another fundamental element that needs to be considered while assessing strategic key elements in strategy.
Fig. [4] – Stakeholder Typology: One, Two, or 3 Attributes Present, source: Mitchell, Bradley & Donna (1997)
In his article Towards a dynamic theory of strategy, Porter (1991) suggests three steps for strategy formulation. Firstly, he mentions the importance of generation and implementation of internally aligned goals and policies. Secondly, he empathizes the importance of aligning firm’s strengths and weaknesses with external (industry) opportunities and threats and also with defined goals. Finally, he mentions the importance of development and effective usage of distinctive competences. He takes environment as an evolving variable so that defined strategies must be re-visited for updates and changes. First part of his suggestions gives the
11
same message that previous articles did about having collectively designed purposes with aligned goals and policies. Second part is vital for re-evaluation of the current strategies since customers make their decisions in comparison with other industry players. Therefore, to be successful, companies must be better at their offerings, must be able to assess and take actions in the event of threats and make use of opportunities. Consequently, competitor analysis and development and effective usage of distinctive competences and resources should be re-visited to make effective updates in strategy.
In relation to the above argument, Barney (1995) argues that researchers that are interested in identifying the roots of competitive advantage generally put more emphasis on opportunities and threats parts of SWOT analysis while internal strengths and weaknesses can be as important in strategy to have a competitive advantage. He renames these internal characteristics as resources and competencies of a company. Resources are mainly defined as what companies have and competencies are defined as what companies can do. To have competitive advantage based on resources and competencies, Barney (1995) argues that these should be valuable (should add value to the company by taking advantage from opportunities or protecting itself from threats), rare (should not be possessed by too many players in the market), and hard to imitate (In this element, historically accumulated resources and competencies that are unique to companies and that are hard to imitate because of their complexity are especially critical). In addition to these, he also argues that organizational structure must enable companies to exploit their competencies and resources. Therefore, article aids the process of strategic key element re-evaluation and helps companies to realize what they are good at and what they have in a systematic way which lead to the analysis of the most effective ones that will contribute to their competitiveness. Thus, companies must capitalize around the selected resources and competencies which appear as crucial key strategic elements that will help them to achieve their goals. Resources and competencies also, as the result of their nature, affect mission, value propositions and consequently targeted customer segments which are vital in re-evaluation process since they affect positioning. On the other hand, discussion in the article is mainly static which is not suitable for the ever-changing business environment. Therefore, it should also include systematic parts about when / under which circumstances and how to do the re-evaluation. It would help to track resources
12
and competencies’ effectiveness which will lead to an update or change in strategy, spot the missing ones or embrace the underrated ones that have potential to add to competitiveness.
In his paper Configurations of Strategy and Structure: Towards A Synthesis, Miller (1986) focuses on empirical studies that are previously done by various authors and argues that there are 4 different commonly mentioned strategic dimensions which are differentiation (in way of either innovation or marketing), focus, cost leadership, and asset parsimony. He chooses these dimensions according to 3 criteria; they are related to content of strategy instead of mechanism of strategy-making, they are monitorable, identifiable, and valid for most industries and they are the roots of many different strategies and contain many different elements for various types of strategy content. Afterwards, he matches these dimensions with strategy types like in the below figure, stating 3 rules of thumb which are; it’s better to follow either cost leadership or differentiation strategies, asset intensity is better for companies that choose flexibility over efficiency, and they need to determine their scope according to their strategy, meaning that they must serve to large number of customers in the case of cost leadership strategy and to smaller number of customers in case of differentiation strategy.
13
In the end, he matches strategy types with the structures of the companies, stating that true matches provide competitive advantage. Matches include simple structure (small size, mainly owner is CEO, top-down, informal) with niche marketing, machine bureaucracy (stringently hierarchical and standardized management, medium-large size) with cost leadership strategy and organic structure (opposite of machine bureaucracy where there is continuous R&D and experimentation for innovation and employees are not restricted with standardized rules) with Innovative differentiation strategy. Therefore, article facilitates the process of combining different strategic elements more accurately and helps companies to position themselves better while boosting the process of value proposition creation considering organizational structure and climate. It also shows the importance of analysing strategic elements together to be more competitive. However, it does not cover the possibility that combination of strategic elements enables structures that lead to positioning like mass customization although it is not crucial for companies that do not manufacture goods.
In his article Towards an Organic Perspective on Strategy, Farjoun (2002) combines mechanistic perspective and organic perspective. He argues that models including Structure-Conduct-Performance (SCP), Strategy-Structure-Performance (SSP), Resource Based View (RBV), and SWOT analysis are critical for the strategy formulation part since it guides companies to align their resources and competencies with the environmental opportunities and threats and stakeholders like customers. However, he mentions that these models are discrete in time, directional (from sources to strategy, or from environment to strategy), and differentiated which means that they pay attention to some elements among environment, resources, and organizational structure while leaving others unattended. On the other hand, organic perspective agrees that mechanistic approach is important for strategic choices but it also argues that it is a continuous process that evolves as the time passes so that strategies needs to be continually re-visited and not every action can be planned so that some are emergent. He proposes a holistic model called Organization-Environment-Strategy-Performance (OESP) that includes Firm Organization, Firm Environment, and Firm Performance which are explained in the below figure, considering that time is continuous and there are different couplings among the elements. Therefore, article shows the importance of considering key strategic elements like resources and competencies, partners, organizational climate, trends & uncertainties, competitors, value proposition and values & goals together
14
knowing that each one can affect another continuously which shows that time should also be considered as a key factor since it affects the effectiveness of different key strategic elements and also their effects on each other.
Fig [6] – The OESP model. Key contributions of the mechanistic and organic models, and distinctive features of the organic perspective, source: Farjoun (2002)
III. CHAPTER 3 – STRATEGY FRAMEWORK
Main framework for the strategy generation will be ‘Strategy Sketch’ from Kraaijenbrink’s Strategy Handbook (2015) since it covers the key strategic elements, which are required in strategy generation or re-evaluation of current strategies and which are also mentioned in the literature review part.
In the strategy sketch, combinations of different elements, which are already mentioned in the framework and expected outcomes part, represent different parts of strategy. Elements 1-2-3-4-5 represent the value creation part, 6-7 represent value capture part, 8-9 represent defining value for the company part and 10th element widens context of organization by including trends & uncertainties. Together all the elements are intended for sustaining the
15
value for the company. To be more specific resources & competences and partners define what company is capable of (means) and Customers & Needs and Competitors define what is being asked (market). Thus, value creation is thought to be composition of these 2 parts. (Kraaijenbrink, J. (2015)) Risk & Costs and Revenue model are the parts related capturing the value while values & goals and organizational climate are related to defining the values. Altogether, elements are designed to help companies to sustain the created value.
Analysis part of the elements also covers additional articles that helps re-evaluation of key strategic elements in a more systematic way. After analysing each element, strategy checks that include coherence, efficiency, effectiveness, uniqueness, flexibility, robustness, scalability, responsibility, pros cons checks are performed for assessment as part of the framework to judge whether the strategy is sufficient enough. Identifying each element and understanding if they are making sense together are two different concepts that are needed to be considered in the process of re-evaluation. (Kraaijenbrink, J. (2015)).
While analysing the elements, re-evaluation is more focused on inside-out approach since current unstable economic environment in tourism sector in Turkey affected financial stability of many players and lead them to re-evaluate their current strategies so that this situation left no room for healthy benchmarking.
Although inside-out approach covers more space in re-evaluation part, various stakeholders, competition, and environmental effects are also considered in the process to have more complex approach and better recommendations for Hotel Flamingo.
A. RESOURCES & COMPENTICES
For the analysis of the resources & competencies, as mentioned in the literature review part, Barney (1995)’s and Prahalad and Hamel (1990)’s papers will be the base within the framework since former one explains what competence is more detail while latter explains what their qualifications should be in a more systematic way to be more competitive and also comments about how these resources & competencies can be applied to enlarge your market. In the process, the most important resources and competencies are spotted and their significance for Hotel Flamingo is explained by the information gained from interviews with
16
managers, on-job observations and interactions with both employees and customers. Afterwards these elements are analyzed in accordance with the literature.
As a hotel, what differentiates a company from another one is mainly resources and competencies that can ease the life of customers during their visits and companies’ ability to make them comfortable. Since hotels have fixed capacities which cannot be arranged like in the case of manufacturing companies, maximum utilization of resources becomes even more important. Thus, correct usage of resources and competencies is critical. In addition, resources or competencies also add value by strengthening economic stabilization since consistent or accelerating service levels enable longer-term relationships with customers by keeping their satisfaction levels high. There are several resources that a Hotel must have at least to minimum level like hygiene services, comfortable rooms, professional employees, room service etc. However, when we analyze the most important resources of HF that differentiate it from rest of the hotels with a competitive edge based on on-job observations and informal interviews with customers, we see that they are: location, asset ownership, and capabilities of employees. Likewise, the most important competencies of the company are; Customer relationship management (CRM), building trust and understanding customer needs.
Hotel Flamingo is located in Aksaray which is in the European side of Turkey and Aksaray has been developed as the transportation hub of Istanbul with the recent metro constructions. It has become the connection point of two major metro lines that connect Ataturk Airport to the rest of the city and the metro stop in Aksaray is just 5 minutes walking distance from Hotel Flamingo. Aksaray is also just 20 minutes away from Taksim and Karaköy where the night life and shopping malls of Istanbul mainly take place and it is 15 minutes away from the old city of Istanbul where tourist attractions like Grand Bazaar, Turkish Baths, Haghia Sophia and many more historical places are located. It is also close to the seaside which is another tourist attraction.
Centrality of the location and being in near transportation hub add value to the company via attracting tourists since these aspects of the location resource ease their life in a foreign city and help them navigate their way better. It is a rare resource since there are not many hotels around the area with the same standards. Aksaray was not in the same situation as
17
“transportation hub” 5 years ago. Underground metro construction that links Aksaray to every other region is completed completely almost 3 years ago with the Yenikapi metro station opening6. Therefore, it has become more popular recently and there are not many hotels
around the area with the same cost/efficiency standards yet. On-job observations showed that most of the hotels in the area are smaller and more amateur although they have similar prices with Hotel Flamingo. It is hard to copy or imitate because there are not many available spaces around the area to construct a Hotel and there are not enough big buildings that can be directly converted into a Hotel as well. One must buy more than couple of apartment buildings, demolish them and build a new hotel or renovate them which will not worth either to the money spent or the effort since they are mainly old buildings that need meticulous renovation and several authorizations from municipality. Some big hotel chains are capable of building their own hotels but they are in a higher segment than Hotel Flamingo which targets different customer segment.
Another resource of the company is the hotel itself. In the area, there are other lower segment smaller hotels that have a potential to steal customers from Hotel Flamingo. However, interviews with hotel managers revealed that these hotels are mainly rented by some entrepreneurs and run as hotels. Therefore, assets are not mainly owned by hotel managers which add extra burden of rent relative to Hotel Flamingo and this situation increases the potential of poorer financial performances in recession times as Hotel Flamingo management observes currently in Turkey. Consequently, owning the assets gives Hotel Flamingo more resilience and a competitive advantage from profitability and service level sustainability point of view since it doesn’t have to cut costs at the same degree as other hotels.
Asset ownership adds value to the company by eliminating direct fixed cost of rent which most of the competitors are subject to and by making company’s movements that are related to the hotel building more flexible and fast since it is not dependent on another party in the decisions making process. Finally, hotel itself is an asset that gains value as the time passes quite higher than inflation rate7. New infrastructure related to transportation also boosts this
increase for HF’s district. Asset ownership and running it at the same time are rare since most
6http://www.metro.istanbul/our-network/m1-yenikap%C4%B1%E2%80%93-ataturk-airport.aspx
18
of the asset owners enjoy having the regular rent income instead. One reason for this situation is that Aksaray takes place in the old city borders and most the buildings are owned by senior citizens. It is hard to copy or imitate this resource because asset owners around the area mainly are not willing to sell since their value increases significantly. It will only be probable to buy if an owner needs an urgent funding or a large financially strong company, which wouldn’t be in the same segment with Hotel Flamingo, offers a great deal.
Final important resource of the company is its employees. Company positioned itself in way so that most of the customers are mainly from middle eastern countries that have Arabic as their native tongue and most of the employees can speak Arabic which makes running the business easier. However, Arabic is the only foreign language that employees can talk. Only managers can speak English as a second language. This situation brings some difficulties if a non-Arabic customer shows up when the managers are not around.
In addition, most of the employees that interact with customers are related to each other and their hometown is Hatay, which is in the south-eastern part of the Turkey so that Hatay is familiar with Arabic culture more. Therefore, apart from knowing the language, they are also familiar with the cultural differences which enables them to connect with customers easier and better.
Knowing the culture of the customers and ability to talk their language add significant value to the company since customers and the hotel personnel don’t get lost in translation which facilitates the process of finding an answer for customers which leads to better customer satisfaction. It is rare because most of the hotels don’t have personnel that knows Arabic. Even the personnel of big hotel chains mainly don’t know Arabic. They generally speak English as a foreign language. This resource is not hard to copy since any hotel can hire an employee that can speak Arabic. However, it is hard to find Arabic-speaking decent behaving employee who will be a fit to the middle segment hotel and who will work for a reasonable salary. These employees mainly prefer more corporate, bigger and international hotel channels.
When we consider the competencies, we see that relationship management of the CEO is the most critical one that has a great gravity in running the business since service sector is all about
19
ability to make customers choose your services. CRM skills enable company to offer the comfort that customers seek proactively by knowing their preferences. In addition, relationship management of the CEO with his neighborhood is also very strong since he is involved with its members and problems. When he walks down the street, most of the shops and the local people behave him like he is the elected neighborhood representative. This also gives Hotel Flamingo a competitive edge since people mainly direct a potential customer in need of accommodation to Hotel Flamingo.
Building trust with customer is another competency that the company has which affects company performance vitally. Trustworthiness of the owner and his guidance to his employees about how to be dependable in work environment strengthen the customer base further. According to Crane & Matten (2010), in virtue ethics, which is one of the normative ethics theories, morally right actions can only be done by people who have virtues characters and people should always try to improve themselves to reach that virtues stage. These virtues characteristics include courage, trustworthiness, honesty, loyalty, friendship, etc.… Owner of the Hotel acts through this theory even if he is not aware of it and he boosts his employees as well. He achieves this competency through being present in the work place most of the time, actively being occupied with customer problems and trying to find solutions to their problems sincerely. Therefore, whenever a customer needs his help or guidance about a matter, they know that they can find him and more importantly they know that they can trust him both personality-wise and ability-wise.
Understanding the need of the customer is the last important competency which can be seen as the extension of CRM competency. However, this competency also includes experience in addition to characteristic specialties. Flamingo Hotel is being run for 19 years and CEO is familiar with his customers’ culture and backgrounds. Therefore, even before the customer asks for anything he is offering solutions to possible problems that they can face which makes this service even more precious.
All three of the competencies add value via strengthening the customer base and increasing potential customer penetration via reputation and word of mouth. They also provide Hotel Flamingo a potential access to new markets because the best advertisement is always the
20
one that is done by customers and these competencies provide it. Most of the new customers are gained via patrons of the Hotel. These competencies always increase the potential for expansion because they add significant value to customer perception and customers don’t except this kind of service from a middle segment Hotel. These 3 competencies also significantly affect the perceived customer benefits since customers always get satisfied when the receptionists and managers remember their names and know their preferences. Customers know that hotel personnel can help them if needed and know that they wouldn’t try to exploit a problematic situation. It is hard to copy since these are competencies are created overtime and special to specific people.
Finally, examining the question of organization, we see that the organizational structure of the company has the required capability to properly harmonize these resources &
competencies since decision making process is fast as the result of a dominant and qualified CEO who is in the business for 20 years. With these competencies combined with location and employee resources; customers can reach to Hotel very easily from Ataturk airport and can easily travel by public transportation to anywhere without additional stress or effort and they will have their problems solved faster since Flamingo Hotel has personnel who can speak their language and who are familiar with their culture. Thus, Hotel Flamingo can use these resources to boost relationships with the customers as stated previously to create continuous and stable customer base.
B. PARTNERS
Partners, which will also be considered as stakeholders, are one of the most important elements that directly adds value to Hotel Flamingo since it is in service sector and the performance of services that are provided by partners are crucial elements that differentiate company from the rest. Having the required supplies, maintenance, financial aids, and all other stakeholder related services timely and efficiently help companies to gain competitive advantage.
To map the partners, “the questions to ask” part of the strategy handbook will be used. Questions include “Who does the organization depend on or frequently work with?”, “Which organization support or most helps you?” and “What useful contacts do your partners have?”.
21
(Kraaijenbrink, J. (2015) p. 67) In addition, stakeholder theory by Mitchell, Agle & Wood (1997), which is covered in literature review part, will be used to understand their saliences for the company.
For the case of HF, important partners/stakeholders can be defined as; various types of suppliers, government, country consulates, financial institutions, family members, maintenance companies and accountant of the company. However, at the following part, only the most important stakeholders that can aid the competitiveness of Hotel Flamingo are presented. Insights are gained by on-job observations and interviews with managers.
Broadly speaking, suppliers of Hotel Flamingo can be listed as; catering firms, suppliers that take place in HORECA (hotels, restaurants, café) market that mainly provide hygiene products, maintenance companies, government in terms of overhead provider and policy maker and furnishing companies. Maintenance companies have a considerable effect since their services are required mainly for urgent issues like pipe fixation, internet service, air-conditioning related problems, common repair needs, etc... If acting for problems like these takes too much time, it may create a great deal of dissatisfaction for customers and affect their perception about the Hotel regarding how much it values its customers. A supplier is an important stakeholder and according to the stakeholder theory (Mitchell , Agle, and Wood (1997)) they have only legitimacy which makes them discretionary stakeholders. They don’t power and urgency because there are lots maintenance companies in the market so that they can be switched easily, and their calls don’t have gravity for the company since it is the service taker. Thus, Hotel Flamingo’s calls are more urgent for maintenance companies.
Secondly consulates of the different middle eastern countries that include Sudan, Yemen, Iran, Iraq, Libya and Egypt are also critical partners of the company. They have power because in these countries, the direction of consulates for accommodation is very critical. Most of the people from these counties don’t have access to good internet connections, caused by weak infrastructures, to make research for different alternatives. More importantly, they have a cultural tendency to take advice from experienced people that they trust instead of making their own researches since these countries have collective cultures instead of individual ones (Crane & Matten 2010). They also have legitimacy because their role for new customer generation is important from company point of view. They also have urgency because if they
22
want an additional information about a tourist that resides in the Hotel, hotel should respond as quickly as possible. Therefore, we can say that it is a definitive stakeholder.
Thirdly, financial service providers are very important for the company since Hotel Flamingo has the strategy of expanding its asset ownership if it seizes an opportunity. This mainly includes buying flats that it can utilize. Therefore, in case of an opportunity like that, banks play an important role since HF will need funding. It has a strong relationship with one of the Turkish Banks (Türkiye İş Bankası) and it has 2 other options with moderate level of relationship. Therefore, it has options if a change of bank is needed which means that financial institutions don’t have power. They have legitimacy since what they serve is vital to realize opportunities. They don’t have urgency if the loans are paid in time which means that they have a potential to be urgent but currently they are not. Therefore, they are discretionary stakeholder as a partner.
Finally, furnishing companies have significance. Hotel Flamingo doesn’t directly purchase brand new furniture when it needs. Instead they buy second hand furniture that are used less than 2 years and still in good shape. Furniture mainly come from big hotel chains since they mainly renew their items more frequently and they are provided to Hotel Flamingo through middleman companies that buy from big hotels and sell to smaller ones. It has power to some extend because being the first Hotel that is being called is critic to get the furniture that are in good shape. Company can always buy brand new furniture but it will be costlier. On the other hand, Hotel Flamingo is also a rare company for them which pays their liabilities right on time. Therefore, company has also power on the furniture company. In addition to buying furniture, Hotel Flamingo also gets valuable information about the big hotel chains, like current trends in their segment and their attitudes toward these trends, sometimes even about little parts of their business plan related to renovations as the result of the degree of relationship. As the result, Hotel Flamingo can take financial or situational position beforehand. This partnership closes an important structural hole for the company since it doesn’t have a direct partner from upper segment. This aspect and the fact that they sell furniture make it legitimate. They also have urgency since if they have any new material available and if they call to meet, they should be responded to catch the opportunity. These combinations make them a definitive stakeholder as a partner.
23
C. CUSTOMERS & NEEDS
To analyze the customers and needs of Hotel Flamingo, in addition to interviews with managers and reception, historical data that is kept by the company about the visitors are also considered. Understanding what customers value can be considered as the most important key strategic element of strategy with realizing what you can do since customers are the subjects that the value is created for. Thus, this makes them definitive stakeholders for every company and their alignment with other key strategic elements becomes even more crucial.
Customer base of the company is mainly individuals who come to Istanbul either for work or leisure. Customers who have business relationships in Istanbul are the most loyal and frequent customers. After them, families who usually visit more often in Summer times come. Business fairs in Turkey mainly target Middle East North Africa (MENA) region and at business fair times, most of the rooms are mainly occupied since these events are popular and the participation rates of different countries from MENA and Eurasia regions are very high. Therefore, customers who come for these fairs can also be included in the customer base.
Customers are generally from Middle Eastern, North African and West Asian countries like Sudan, Yemen, Iran, Iraq, Libya, Georgia, Qatar, Lebanon, Azerbaijan and Egypt. While these regions cover 34,88% of the total tourists that visited Turkey in 2016, mentioned countries cover approximately 16,53% of the total tourist numbers for the same period without any segmentation of other attributes. When historical progress of the percentage rates in total is analyzed, tourists from these countries represent 11,44% and 12,87% in 2014 and 2015 respectively8. Absolute numbers are expected to decrease in 2017 but percentage portion of
the countries is expected to rise since European tourist numbers (Tourists who are originally Turkish and don’t need accommodation as the result of having a relative in Turkey are also included in the number but do not have any value for the company so that in reality portion is lower) show a decrease from 44,46% to 40,84 from 2014 to 20169. Therefore, base customer
of company is less affected from the externalities which is a relatively good sign for future for now. Company does not have any direct customer in the corporate segment.
8http://www.tursab.org.tr/tr/turizm-verileri/istatistikler/milliyetlerine-gore-gelen-yabanci-ziyaretciler
24
Need of the current customers is a family-oriented Hotel that offers combination of comfort, trust, efficiency (in means of quality/price), and proximity. While other needs are self-explanatory, element of trust for this customer base means being the customer of a company which is culturally familiar to them.
Family-oriented approach of the hotel is the most significant element for customers, including the ones who visit for work since they also share the same cultural background. This aspect of the customers will not change since mentioned regions can be considered religious where marriage and family are accepted as divine rules. Therefore, changing this value proposition to enlarge customer base will damage the current business for sure. However, base of the customer may be increased via exploring new markets that are in line with this value proposition.
D. COMPETITORS
Competitor analysis is critical in the strategy process since as mentioned in the literature part, it is vital for a company to align its capabilities with the opportunities in the environment and protect itself from the adverse effects. Porter’s (2008) classic five forces model, which is explained in the figure below, can be useful for the assessment of the current situation.
Fig [7] – The five forces model of Industry Competition, Source: Porter (2008)
For the analysis of the case for Flamingo Hotel, statistical numbers from official government site of Association of Turkish Travel Agencies and Turkish Statistical Institute and interviews with top managers are used. As indicated in the background section, growth in tourist
25
numbers until 2014 spurred the number of accommodation companies until 2015. Although official site does not include the latter number for Hotel Flamingo’s area, it’s expected to decrease as the natural result caused by excess supply. This information is also confirmed by Hotel Flamingo’s manager who stated there are many hotels that are going out of business in their neighborhood. Although area covers a small portion of the industry, this information can be taken as an indication for the current situation of Hotel Flamingo’s competitors. In addition to this insight, when tourism incomes of Turkey are compared quarterly which is indicated in the background section, we can conclude that new entrants in the middle segment are not threat for the current situation since tourism sector shows decline and it is not an attractive investment in the short-term for profitability.
Supplier power is analyzed in the partners section. Recently, suppliers that provide online booking services10 in new customer acquisition became more powerful as the result of their
popularity which is gained by their efficiency as means of performance/price while traditional travel agencies still have the same effect since number of players in this sector also increased like in the case of accommodation provider numbers over the years11. Commodity goods
providers that can be easily switched remained in the same situation considering their power. Number of players in commodity goods provider industry are not affected that much since they serve many industries which enables them to spread their risks. In fact, interviews with managers revealed that as the result of collection problems, hotels that can pay timely gained power over some of these suppliers. Other common suppliers like financial companies and government preserve their value.
Substitutes mainly include AirBnB and alike companies that provide the same fundamental services as Hotels. However, this situation did not affect Hotel Flamingo since majority of its customers don’t use online services unlike in the case of the customers of these substitutes. Customers can be considered the most important element according to the framework since their numbers decreased recently and caused the main problem. As mentioned in customers
10http://ec.europa.eu/eurostat/statistics-explained/index.php/Statistics_on_ICT_use_in_tourism
11
26
and needs part, understanding their values and providing offers accordingly are critical, especially recently since companies can’t afford to lose customers who still visit Turkey.
E. VALUE PROPOSITION
The most important parts of value proposition are understanding who are your customers and what they need. Embodiment of the “set direction”, which is discussed in the literature part, is in value proposition since it is the combination of what companies want to offer and can offer. To analyze this element for Hotel Flamingo, main data are the interviews which are done with managers and receptionists.
Treacy & Wiersema (1993) argues that there are 3 main value disciplines that define the main direction of the company’s business strategy. As discussed in the literature review part, setting direction for companies facilitates their actions and provide them more consistent outcomes which is an important element to achieve competitive advantage. According Treacy & Wiersema (1993), to be successful, companies must exceed the threshold for 2 values and excel at 1. 3 disciplines are stated as product leadership that offers the best product, operational excellence that offers the best total cost, and customer intimacy that offers the best solution.
For the case of Hotel Flamingo, it is more in the direction of customer intimacy since CEO puts customer needs as 1st priority and deals with customers in his daily routine to solve their
problems. Operational excellence comes 2nd since Hotel Flamingo has a better total offer
compared to similar hotels in the area as the result of its asset ownership and efficient usage of overheads. Value proposition of the company includes the elements in the customer and needs parts which are selling trust, comfort and price/efficiency through accommodation services to family-oriented customers and it wouldn’t change even if a suggestion is made. CEO of the company is strict about these issues which is logical because it provides competitive edge to the company considering the values of the customers.
F. REVENUE MODEL
In re-evaluation process, revenue model is the strategic element that captures value in means of income so that adapting or improving it according to the current technological trends and
27
customers’ preferences is critical. The reason why this element is emphasized in my analysis is that the current revenue model of HF is quite straight-forward and it has a space to grow with the combination of other chosen elements in the strategy sketch.
As stated in the strategy handbook, revenue model answers the questions “Where does your revenue come from?”, “Which people or organizations pay?”, and “For what, how much and in what form do they pay?”. (Kraaijenbrink, J. (2015) p. 82-83) These questions will help to capture the current revenue model of companies and enable us to improve it.
In their article Business Model Navigator article, Gassmann, Frankenberger, & Csik (2013) offers 55 cards that consist of different practices that are commonly used by companies to improve their revenue models. These practices are useful according to what improvements companies seek. In the case of Hotel Flamingo, what is sought is longer term and stable incomes that are more externality free. Therefore, cash machine card that suggests taking money before the service may be a good solution. This approach can be used to connect exploitation of current resources to revenue model.
Collection form of Hotel Flamingo includes cash or credit card like most hotels. However, company doesn’t get advantage of the mail order or any other transaction mode through the internet payments. It has a web site but it uses it only to make a reservation and customers pay the price when they are physically in the Hotel.
When we consider “who really pays”, we see that it is either the customer or the company of the customer. However, most of the companies don’t direct their employees to a certain hotel, instead they mainly assign them a budget and employees are free to choose their accommodation. Therefore, the real customers are again individuals.
Prices are set according to alike Hotels; they are about the same or a little lower from them. As the result of its asset ownership, Hotel Flamingo can absorb the price difference and serve above the par considering industry quality in its segment.
28
G. RISKS & COSTS
Hotel Flamingo is currently in a situation where most of the risks are generated from political-based external environment and company does not have any power to affect these events. These risks are considered in externalities & trend section.
Cost structure of the company is handled efficiently with the effort of the management. Manager has a character that closes the lights when he thinks it is not necessary wherever he is. He says that “Wasting energy is wasting national wealth.” Therefore, energy costs and water costs which are the most important overhead expenditures of the company are at minimal level. Medium size of the Hotel also enables the efficient management since it is easier to manage smaller sizes. All employees are in the payroll of the company and no excess employees work. In addition, transactions costs are also at minimum since they barely exist. However, company does not take the advantages of out-sourcing activities that has the potential to decrease costs while changing the current form of giving services to customers. This change has the potential to increase customer satisfaction since outsource companies are more specialized at what they do as the result of having limited number of services. To decide which activities to outsource, core and non-core activities of companies must be identified and non-core elements that don’t extra value to companies but needed be conformed at least at a minimal level must be considered. (Slack, Brandon-Jones, Chambers, Johnston & Betts (2015))
H. VALUES AND GOALS
Values and Goals part mainly include vision, mission, key values, and objectives of companies. (Kraaijenbrink, J. (2015)) As discussed in the literature part, strategy sets direction to companies so that they can behave in a predictable way under any condition. These aspects are important for companies in this sense and enable communication through the company so that everyone is aligned. (Mitzberg, H. (1987)). Value proposition is indicated as embodiment of “set direction” in value proposition part, so that values and goals can be mentioned as the embodiment of value proposition since they include more detailed parts that generate it.
29
Values and Goals of Hotel Flamingo are determined by the interviews with the managers. What company aims is maximizing the occupied number of rooms every season and in every situation while sticking to their customer segment and maintaining the values offered that also match with the HF’s as indicated in the value proposition part. Values include selling trust, comfort and price/efficiency. Hotel Flamingo doesn’t have ambitious goals like improving itself to the level of other big hotel chains since it is nearly impossible because of the required intense external funding and limited capacity increase options. Therefore, changes in the values and goals of the company will not add any competitive edge considering the current ones.
İ. ORGANIZATIONAL CLIMATE
Information related to organizational climate of Hotel Flamingo is gathered mainly through on-job observations and informal interviews with both managers and employees. As discussed in the literature review part, structure of the company and the power and involvement of CEO in daily works affect the organizational climate and how decisions are made.
Hotel Flamingo has a very compact and sincere organizational climate as the result of the family-owned structure of the company and few number of employees. All the employees know each other and there is an organic hierarchy related to the ages of the personnel. They do not compete with each other, all of them respect CEO’s decisions and all of them know the procedures since average seniority of employees is around 6 years. These aspects put HF closer to the emergent side of the continuum (Mintzberg & Waters (1985)) which make it more agile in decision making. This organizational climate is also more aligned with the characteristics of employees since none of them has any corporate experience previously. Therefore, effort to make a change in organizational climate to provide a common culture that will support company to exploit its resources and competencies is not needed. (Prahald C.K., Hamel G. (1990))
J. TRENDS & UNCERTAINTIES
In this part of the analysis, categorization of externalities which are mentioned in the introduction part will be made, and some of the trends that the tourism industry in Turkey faces today will be listed to conceptualize the events in a framework. This element has a grave
30
importance to the company because of Turkey’s political problems and because of its location where politically and militarily aggressive neighbors exist.
Considering the risks using the PESTLE (Political, Economic, Social, Technological, Legal, Environmental trends & externalities) analysis, which is also introduced by Kraaijenbrink (2015) and which enables companies to systematically define these 2 key strategic elements under certain groupings, it is seen that externalities are legal and political whereas trends are technological and social. Based onKaplan and Mikes (2012)’s article “Managing Risks: A New Framework”, which enables companies to define identified externalities’ nature so that companies can realize their ability to make changes on them, all the externalities that are mentioned in the introduction take place in category 3 which includes risks that arise from the events outside the company and which are beyond its influence and control since they are political and legal. Externalities can be listed as; terrorist attacks, political unrest within the country, political problems in neighbor countries that affect Turkey, tense political relationships with countries that form important part of costumer bases and regulation changes in visa procedures that make these customers’ lives harder in the process of taking visa to enter Turkey.
HF doesn’t have a Category 1 risks that arise from within the company which are mainly related to the organizational climate, inappropriate actions of employees, or breakdown of system processes since owner of the company is always present in the Hotel (Literally living in the Hotel) and has direct monitoring and interference to the events. HF also doesn’t have
Category 2 risk since there are not any decisions taken recently that makes a difference in the
strategy of the company. However, this may be the case with the new suggestions that will be introduced in the Implication/Managerial Implications part of the report.
In order the capture the total essence of the external industry, identification of the trends is also important since they may have indications that some of the players in the industry already took some precautions to diminish the effect of externalities and they may have totally different approaches that Hotel Flamingo may also use. Trends are mainly based on web-based technologies and changes in the preferences of customers. Current trends can be enlisted as; increase in value of automated customer relationship systems, usage of internet
31
for new customer generation, gravity of travel agencies, increases in the percentage number of tourists from MENA region, and emergence of Boutique-Style small but concept hotels in wealthier parts of Istanbul.
IV. CHAPTER 4 - STRATEGY ASSESSMENT
In this part, assessment of the current strategy is done with 9 criteria which are also part of the strategy sketch framework. In strategy framework part, application of main framework is mainly used to analyze the current situation and target key strategic elements that have the potential to add competitiveness. On the other hand, strategy assessment process is used to come up with improvements points in a more systematic way considering this analysis.
To make recommendations to differentiate Hotel Flamingo, and diminish the effects of externalities, resources and competencies are used as the starting point since focus is more on inside-out approach as mentioned previously. Partners are considered as the second most important element as the result of their potential to provide new customer acquisition. Other elements are also considered in alignment to make suggestions since holistic approach yields more effective results by enabling companies to understand the effects of key strategic elements in combination.
Coherence Check
Coherence check helps to assess the relationship between different elements in the strategy sketch and see if combination of these elements, which are selected according to their importance to companies, make sense and whether they can be improved. (Kraaijenbrink, J. (2015))
In coherence check part, focus will be on relationships to have more stable income which will improve the resilience of Hotel Flamingo against externalities. As discussed previously, selected key strategic elements for Hotel Flamingo cover resources & competencies, partners, and trend & uncertainties. In addition to these, their effects on revenue model is also considered since it is the key strategic element that enable companies to capture value.
Partners + Trends & Uncertainties: Trends in the industry, like in most of the industries, is the
usage boom of e-commerce in recent years. However, HF is still attached to its traditional way of making money. Therefore, analyzing partners that give services aligned with trends and
