Operations Management: Case of Holton Hotels
The success in business operations is possible through skillful and strategic approaches to various aspects of the operations. Every business organization depends on its stakeholders who are essential pillars of the success (Walker et al., 2015). In particular, customers are highly valuable for a business organization. The modern business environment is highly competitive. Some current successful organizations may fail in future due increased competition and the imitation of their strategies as well as intrusion into their business intelligence by the competitors (Walker et al., 2015). Therefore, the managements have to improve their approaches to business operations to align them with changes in business environment. Various companies develop business strategies to improve customer relations due to increased competition. An example is CRM initiative of Hilton Hotels (Lynda, 2008). Some of these strategies improve business performance while other lead to reduced revenue and inefficiencies due to poor implementation. This paper will answer various questions related to the case of Hilton Hotels to demonstrate how companies develop strategies to enhance their business model and performance.
1.0 Describe Hilton’s business model and how they provide value to their franchisees and their guests. Why is this model viable in the industry?
Business organizations tend to develop and upgrade their designs of activities to ensure improved and successful operations. Some of the actions that companies consider when designing their business model include revenue sources, customer base, and their current market position in terms of competition (Walker et al., 2015). Hilton has implemented various strategies to enhance its business model. The design of initiatives like CRM to enhance customer relations has resulted in improved markets as well as customer loyalty. Additionally, the use of OnQ technology for property management has improved efficiency in service delivery in various ways such as integration of clients’ information to speed up its service delivery and room assignment to different guests (Lynda, 2008).
Most business organizations aim at expanding their operations to serve wider markets. However, they usually have limited capital to achieve such growth (Prahalad and Hammel, 1990). Hilton has tried to overcome this challenge by partnering with various agents such as the owners of real estate. This promotes its revenue generation using the investments of other people. Brand diversification is crucial to the success of a firm in a competitive market. Hilton has diversified its services to include other attractive features like casinos to improve its market position and revenue (Lynda, 2008). Such diversification of services is essential to the guest since it assures them of different services under the same roof. The establishment of franchises and acquisition of various rival companies has made fundamental contributions to the growth of Hilton.
According to Treacy and Wiersema (1997), holding of franchises in various regions benefits both the company through market expansion and the franchisees through various ways such as employment creation. The use of electronic systems for distribution does not only promote the recognition of the company but also help to ensure the quality of services which has great benefit for the guests.
The industry has been facing various challenges like limited access to capital, standardization of operations, and labor turnover (Lynda, 2008). However, through the improvements in its business model, Hilton has been able to overcome some of these challenges. For example, the establishment of partnerships with other investors like real estate owners has improved its viability in achieving increased capital for business expansion. The use of electronic distribution mechanism and OnQ technology constitutes a great opportunity for the success of the company. The improved service delivery through the implementation of strategies like CRM which the company launched in 2012 resulted in enhanced customer loyalty which is instrumental to the success of the business (Lynda, 2008).
2.0 Describe in details the benefits and strengths of Hilton’s CRM and its weaknesses
The launching of CRM has contributed significantly to the improvements of Hilton’s business operations as well as revenue generation. Customers constitute the most fundamental part of the market for a business organization (Treacy & Wiersema, 1997). Therefore, establishing and maintaining a strong relationship with them is significant to the market- expansion objective of a company. One of the many goals of CRM is to foster good client relationship that boosted the success of Hilton (Lynda, 2008). Effective client relation results in high customer loyalty. Therefore, CRM strategy has been of great benefit to Hilton in terms of consistency in quality service delivery that has consistently improved its revenue. Additionally, the implementation of CRM has improved the competitive position of Hilton, which is crucial for its profitability (Lynda, 2008). However, the CRM has various weaknesses.
The realization of the effectiveness of CRM depends on the consistency of delivering quality services. Therefore, during low market, the strategy may be inefficient due to reduced profitability. Another challenge is whether this strategy has long -term benefits for the company. The competitors may imitate this strategy after realizing that it has significant benefits. As a result, Hilton may not reap long-term benefits from CRM. Additionally, the company may become complacent with short- term success of the strategy, resulting in reduced benefits.
3.0 How would you measure Hilton’s CRM program’s success? What actions should Hilton take in regard to their CRM?
CRM initiative is expected to improve the revenue and profitability of the company through improved customer base. Additionally, the strategy should improve the market position of the company because of enhanced customer relations. Customers should produce positive responses to the strategy. Therefore, to measure its success, I will conduct market surveys to collect the opinions of the customers on the initiative, analyze this information to evaluate the response of the market. Additionally, I will set some targets to be achieved over a specified period in terms of improved revenue or profitability, and check whether there will be significant improvements due to the implementation of the program. Hilton should invest more resources in the program because it constitutes huge benefits. Also, the company should put in place effective measures to ensure the long-term benefits from the initiative. This can be achieved through consistent improvements to ensure that the company is always above its competitors.
4.0 Based on what you have learned about operations, what are the things that Hilton gains from having an operating system like CRM?
CRM initiative has numerous benefits for Hilton. Having a strong customer relationship is a great achievement for a business organization because customers constitute key business stakeholders (Treacy & Wiersema, 1997). Therefore, a program like CRM that promotes customer relationship with a company increases stakeholders and the market for company’s products and services. Additionally, Hilton gains improved customer loyalty which helps to enhance its competitiveness. Furthermore, a program that involves customers like CRM enables a company to improve the quality of its services and products through customers’ opinions. Therefore, Hilton gains high brand reputation and customer trust through the implementation of CRM.
References
Lynda, M. (2008).Hilton Hotels: Brand differentiation through customer relationship management. Havard Business School.
Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. In Strategische unternehmungsplanung—strategische unternehmungsführung, 68(3), 275-292
Treacy, M. & Wiersema , F. (1997). Customer Intimacy and Other Value Disciplines. Harvard Business Review, 711, 84-93
Walker, H., Chicksand, D., Radnor, Z., & Watson, G. (2015). Theoretical perspectives in operations management: an analysis of the literature. International Journal of Operations & Production Management, 35(8), 1182-1206.
