Introduction
The hospitality industry is most competitive business sectors in the world. Organizations under this industry use corporate strategies in order to win the competition and achieve their business goals. Corporate strategies concentrate on broad and long-term issues that show the type of business and the functions of the business. Firms implement one or more than one of these major types of corporate strategies. These are Concentration, Vertical integration, Horizontal integration, Diversification, and International (Enz, 2010). The following paper provides an analysis of corporate strategies of five hospitality firms. The main strategies investigated in these firms are concentration, vertical integration, and diversification. The selected firms were:
- Southwest Airlines
- McDonalds
- Taco Bell
- Coca-Cola company
- Starbucks
Southwest Airlines
Herb Kelleher founded Southwest Airlines in 1971 with the goal of establishing an industry that caters for the needs of customers and employees with pride. Since its establishment, the company has generated a lovely working environment that rewards various personalities and enhances excellent customer services. The company’s mission is to ensure satisfaction of both internal and external customers. The company aims at delivering quality customer services with a sense of friendliness, individual pride, warmth, and company spirit. Southwest Airlines’ dedication has made it emerge the largest carrier of U.S. domestic passengers flying to more than 100 destinations in more than 40 countries (Hoovers Inc, 2014).
In an effort to meet its goals, Southwest Airlines has developed a diversification corporate strategy. Because of the competitive nature of the airline industry, Southwest positions its services by projecting its image in order for customers to differentiate from competitors. The diversification strategy helps the company create more value in excess of what it really enjoyed earlier. Offering low-cost fares to customers compared to other airline firms makes the company more competitive. In addition, the company implements the employee management strategy that ensures all employees love their working environment hence, minimizing the number of complaints.
McDonalds
McDonald’s restaurant has been in operation for more than 50 years and continues improving its products and services by pushing for innovation in a variety of initiatives. The firm owns more than thirty thousand restaurants in more than one hundred countries and provides food to more than fifty million customers daily. The establishment of other fast food restaurants has created hard times for McDonalds in the present business environment. In order to get back to the track, the company developed strategies focusing on new menu items, customer experience, and redesigned restaurants (Hoovers Inc, 2014). A survey of the external and internal situation analysis led to the implementation of these strategies.
McDonalds pursue both concentration and diversification corporate strategies. Under the concentration strategy, McDonalds developed new and unique menu items. A team of experts were deployed to carry out a study on different needs of customers from different cultures across the globe. The information collected assisted the restaurant develop new menu items that suited different tastes of people. On the other hand, McDonalds needed to control problems like competition. The diversification strategy played a role in developing new differentiated and healthy food products in order to win the global competition. Moreover, the store redesigned its stores to fit the changing needs and preferences of customers.
Taco Bell
Taco Bell is a fast-food restaurant based in California specializing in Mexican-style fast food. The restaurant was started in 1946 as a hot dog stand by Glen Bell. Presently, the restaurant has established as the best fast-food business in California. Presently the restaurant has more than 6,000 stores featuring a wide range of Mexican-style menu items. Examples of menu items found here include burritos, gorditas, nachos, tacos, and quesadillas among many others. The management of the company works with suppliers to offer great tasting, high-quality dishes. In addition, the restaurant offers fresh food products that suit all customer needs and at a pocket-friendly price. The image of the company has changed for the better through the implementation of a diversification corporate strategy.
Taco Bell implements the diversification strategy by improving the value of its food products and introducing new menu items. The restaurant has improved its menu through introducing more Mexican diets selling more than 1 billion units in the year 2012. I n addition, the restaurant improved its ingredients that led to high-quality dishes. Moreover, the restaurant introduced a strategy aimed at improving the image of the company as a snack and late-night destination. The strategy attracts many customers who chose from different options of dishes that suited their changing tastes. The breakfast menu launched in March 27, 2014 also hoped to increase the sales of the company. The following strategy increased sales by 5 percent in 2013 (Lutz, 2014).
The Coca-Cola Company
Coca-Cola is an American multinational beverage manufacturer, retailer, and marketer of non-alcoholic drinks. The company was invented by John Pemberton in 1886. Coca-Cola has its headquarters at Atlanta, Georgia. Coke forms one of the most recognized non-alcoholic brands in the world. The Coca-Cola firm produced 16 million brands like Coca-cola, Diet Coke, Sprite, and Fanta. The company also produces other leading brands like vitamin water, PowerAde, Minute Maid, and many others. It operates in more than 200 countries. The company aims at achieving its goals through long-term investment strategies and unique marketing expertise, bottling and brands. In order to achieve its mission, the company conducts a continuous consumer awareness of its products through media advertisements and promotions. All these processes occur through the implementation of a vertical integration corporate strategy.
The company integrates different value chain activities through coordinating all its downstream and upstream suppliers. At Coca-Cola Company, all operations are conducted from a central position. The implementation of the forward vertical integration helps the company balance all its operations by building excess upstream capacity that ensure downstream operations receive a sufficient supply and meets consumers’ demands. In addition, the strategy improves the number of entry barriers because of the firm has gained sole access to raw materials. Moreover, the strategy has made Coca-Cola supply chain more coordinated and improved delivery of products to consumers in all locations across the world.
Starbucks
Starbucks is an American Corporation started in 1971. The company involves in roasting, marketing and retailing special coffee across the world. It has more than 19,000 stores around the world and offers employment to hundred thousands of people. The main products offered by the company are roasted and handcrafted high-quality coffee, tea, fresh food items, and different types of beverages. The company competes with other firms in the retail coffee and snacks store businesses. Changes in consumer tastes form the major slowdown to the company’s growth and development. The present contemporary business environment and advancement in technology have introduced many threats to the company that once ranked the best in the industry (Geereddy, 2013). In order to overcome many business challenges, Starbucks has implemented both vertical integration and diversification strategies.
Starbucks has introduced diverse products in an effort to cope with the challenging business environment. The company produces different varieties of coffee with unique tastes and flavours to cater for different customer tastes and preferences. Moreover, the firm purchased modern technology equipments and machines that ensure timely preparation of coffee. The diversification strategy also gave the firm an opportunity to generate more profits in coffee market share through launching of the new brand called Seattle’s best. On the other hand, the company implements the vertical integration strategy by offering highest prices for raw materials. The pricing strategy adopted by the company makes many farmers prefer selling their coffee to the company.
Conclusion
The analysis shows that different firms implement different corporate strategies in order to achieve their business goals. The identification of the corporate strategy pursued by the firm was made easier by looking at the firm’s business goals, mission and vision statements. In addition, a look at the firm’s marketing goals led to the identification of the strategy. Firms that aimed at improving the quality of products and services through introducing new ideas pursued the diversification corporate strategy. For example, Southwest Airlines and McDonalds had a similar corporate strategy. The paper discovered that firms in the hospitality industry seek strategies that attract customers to their businesses. The sensitive nature of this industry requires that businesses value customers more than any other thing. In addition, some firms pursued different corporate strategies not mentioned in the paper. Concentration strategy revealed itself in firms like Taco Bell, who concentrated on improving one products time over time.
References
Enz, C. A. (2010). Hospitality strategic management concepts and cases (2nd ed.). Hoboken,
N.J.: John Wiley & Sons.
Geereddy, N. (2013). Strategic analysis of Starbucks Corporation. Available at
http://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf
Hoovers, Inc. (2014, October 11). SOUTHWEST AIRLINES CO.Company Information. SOUTHWEST AIRLINES CO. Retrieved October 11, 2014, from http://www.hoovers.com/company-information/cs/company-profile.SOUTHWEST_AIRLINES_CO.0e6ec4453
Hoovers, Inc. (2014, October 11). TACO BELL CORP. Names of Competitors. TACO BELL CORP. Names of Competitors. Retrieved October 11, 2014, from http://www.hoovers.com/company-information/cs/competition.TACO_BELL_CORP
Lutz, A. (2014, March 28). Taco Bell Made 2 Changes That Transformed The Brand.
Business Insider. Retrieved October 9, 2014, from http://www.businessinsider.com/taco-bell-marketing-strategy-2014-3
