Abstract
This paper aims at discussing and evaluating the strategic management of Four Seasons Hotel and Resort’s 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 Porter’s five forces help to understand the current challenges facing the company from the perspective of the hospitality industry.
Introduction
As the world’s 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 Season’s competitive advantage allows it to better serve customers more than competitors, hence create a better customer value and achieve superior performance.
Dynamic capabilities
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 company’s 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.
Forces shaping the hospitality industry
The company focuses exclusively on the luxury segment of the hospitality industry. Porter’s 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, supplier’s 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
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 owner’s 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 property’s 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 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 Season’s 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 Season’s excellence is the precise translation of its strong brand into successful strategies that can deliver customer benefit.
Bibliography:
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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 Porter’s “five forces” model: summary and interpretation [pdf] Available at: < > [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.
