Malmaison is a boutique hotel that operates in the United Kingdom. A boutique hotel is a type of hotel that offers personalised services to its customers. The ability of boutique hotels to offer tailor made services to their customers is based on the fact that they are small in size. This ensures that the service staff concentrates on individual guests and offer services according to their specifications of their patrons. Malmaison’s business is mainly located within London city centre. Like any other business, Malmaison boutique hotel operates in an environment with both opportunities and competition. To shield itself from being driven out of business by its competitors as well as taking advantage of the business opportunities in its environment, Malmaison boutique hotel requires strategies.
These strategies are meant to guide the hotel in moving in the most profitable direction while offering its customers value for their money (Kozami, 2005). There exists a variety of strategies that the hotel can embark on to achieve its goals. However, there exist many constraints that cannot allow the hotel to implement all the strategies at its disposal. As such, the hotel must choose the most appropriate strategy that can be achieved with the available resources. This report will examine strategic choices at the disposal of Malmaison boutique hotel and all the contingencies that surround the implementation of these strategies.
Malmaison’s generic strategies
Generic strategies refer to the planning that involves the long-term goals of an organization. These strategies are very important to an organization as they help an organization to have a competitive edge over its competitors. Growth strategies are a key component of Malmaison’s business strategies. Malmaison has demonstrated this by recently acquiring what was formally known as MLS centres. This acquisition has greatly benefited the hotel in that it has increased its market share. Actually, many of the customers who were being served by MLS centres have started streaming to Malmaison as an alternative. The acquisition has also ensured that the number of competitors for Malmaison boutique hotel is minimized. Moreover, the acquisition has made it easy for Malmaison hotel to enter a new market segment as well as commanding brand control in the boutique hotel industry.
Malmaison boutique hotel has dealt a blow on its competitors by consistently providing the same quality services to its customers. Hill (2009) asserts that this is a good competitive strategy that ensures that customers are retained through creating brand loyalty with them. Initially, Malmaison boutique hotel had specialized in offering office and conference facilities to large corporations. However, this has changed in the recent past as the hotel has seen the need to diversify its customer base, by starting to offer services to small size and medium size businesses. Moreover, Malmaison hotel has ensured innovation of value to its customers by keeping at per with the current technology, which is highly desired by its customers especially those who use conference facilities. Value proposition refers to those aspects that provide extra satisfaction to a customer (Grant, 2005). An organization with the ability to provide its clients with surplus satisfaction at no extra cost is always ahead of its competitors.
This is because such an organization has the ability to retain its current customers and attract new ones. Malmaison hotel has created value proposition by providing tailor-made services to its customers. Its products and services are very flexible and can be manipulated to meet the special needs of its clients. This makes the customers feel unique and seek the hotel’s services more often as well as recommending others to the same hotel. Consequently, the volume of business grows rapidly, ensuring that Malmaison controls a big size of the market. Customer loyalty created due to quality service provided makes it very hard for new hotels to enter the market became they may not be able to snatch customers from existing hotels and quality of products and services is very high for them to provide with their humble resources.
These generic strategies of Malmaison boutique hotel fits very well in the profile of boutique hotels. With the ever changing market environment, customer retention determines the success of any given organization. Given that the hotel belongs to the intangible service industry, focus on service quality is an aspect that cannot be overlooked in an organization determined to make profits and increase their business volume.
Strategic development directions
There exists a variety of directions that organizations can adopt that will guide them in the long-term achievement of goals. Malmaison hotel has adopted both product and market directions in defining its strategies. Since the hotel is more in the service than product industry, service delivery becomes the main activity of the hotel. Product development involves designing products such that they look different and therefore appeal to existing customers. Malmaison hotel has succeeded in adopting this direction since it constantly changes its services depending on the specific requirements of the clients. Diversification is another direction that organizations take in the process of achieving their long-term goals (Havaldar, 2010). It involves designing new products that are aimed at new markets. At Malmaison, this has not been fully incorporated since the hotels have not moved outside the city of London and its environs. This direction will be very useful when the boutique hotel will expand to other countries and regions.
When Malmaison boutique hotel will go global, it will be required to make new products that suit tastes and preferences of different customers in new cultural backgrounds. The market direction involves two aspects: market penetration and market development (Goldman 2008). In market penetration, products that already existed are sold to existing customers. This direction aims at achieving a greater market share for the existing products. Moreover, it is aimed at changing the structure of the market by eliminating competitors from the market. Aggressive marketing, followed by a well-designed pricing strategy can make the market unfavourable for competitors. This drives them away, leaving the organization carrying out the promotion dominating the market. Another reason for trying to penetrate the market is to increase the volume of consumption of the products by existing customers (Gollakota, 2007). An organization embarking on this direction is one which has full information about the market and competitors. As such, it has the ability to determine the needs of the consumers and ways of satisfying them better.
Market development on the other hand involves selling existing products in markets that are untapped. There is a variety of ways through which this direction can be approached. An organization may devise new aspects of its products or services such that they reflect the targeted market and provides convenience to it. This way, the new customers are able to identify with the products or services. Consequently, there is creation of customer loyalty. Moving in to unfamiliar geographical settings can also provide a new market for goods already being sold. Such regions have very high chances of growth. An organization that establishes well in such areas is able to pre-empt the actions of its competitors and reap large benefits before new players come into the market (Griffin, 2008). Especially for a boutique hotel, using different prices for the same products in the new market helps in tapping several market segments.
Methods for adopting each direction
Internal growth and external growth are two methods that are used in implementing the various directions that organizations undertake in order to develop. These two methods are appropriate for Malmaison boutique. Internal growth involves improving the competences that are important in providing quality products and services to the customers (Hill, 2008). Profits that are realized from successful business ventures are re-invested in the business to make its capacity to produce and deliver better. Between the two methods, external growth is the most appropriate for Malmaison boutique. External growth involves merging of two organizations to form one (Misra, 2009). The two organizations have a say in the new business partnerships in terms of decision making and sharing of profits. The advantage of merging is that there is a wide variety of products that the organization produces. Products that were previously produced independently by the merging organizations become products of a single organization.
Likewise, the new organization formed after the merger has a larger market share since the market share incorporates those that were owned independently by the already merged organizations. Merging reduces the number of players in the market thereby reducing competition. According to Misra and Misra (2009), reduced competition leads to the merged organizations controlling the market and therefore increasing their profit margins. The merged organizations are able to gain access to new technology that they could not have accessed when they were operating independently (Griffin, 2007). This is due the increased capital base that is contributed by the merged organizations. New technology helps the organizations to improve their performance and value proposition (Barnford, 2010).The number of brands under the control of the merged organizations is more than when the merged organizations were operating individually. External growth also entails acquisition of one organization by another (Dun & Bradstreet, 2008).
In this setup, the organization that takes over the other has full control of the newly formed organization in terms of decision making and profit sharing. Malmaison boutique hotel has already utilised this method when it acquired MLS centres. Malmaison boutique hotel has a plan to expand up to the global scale. To effectively operate in foreign countries, the hotel would need to collaborate with local organizations in the foreign countries. The organizations to work with could be suppliers and advertisement agencies. The relationship could involve merging or takeovers. The hotel will be utilizing the experience of these organizations by relating well with them since they have operated in the new market for a long time and therefore understand the market better. The hotel will therefore be able to understand the customers’ preference and tastes. This understanding will help in devising methods of satisfying the customers. According to Dealtry (2002), timely solutions are critical at the global arena in solving customers’ problems.
Product-oriented development direction is crucial strategy for Malmaison boutique hotel. A swot analysis of the hotel portrays it as being unique. This is a strength that keeps the hotel ahead of its competitors. The uniqueness of the hotel lies in its ability to adapt to the changing needs of its customers. The good services offered to the customers make them identify with the hotel. The loyal customers, through the word of mouth market the hotel. This is a strength that has been identified through swot analysis. The fact that the 2012 Olympic Games will be held in London offers a good opportunity for the hotel to familiarize with profiles of the different countries that will be attending the Olympic Games. This will help the hotel to customize its products and services to meet the expectations of the different customers. Diversification of its products is an attractive feature that has the ability to attract customers from various backgrounds. The existence of few competitors in this is a good opportunity for Malmaison boutique hotel to establish a strong brand through quality services to its clients. Through offering superior products and services to customers, entry to this market segment by competitors will be very difficult as providing products with higher quality than Malmaison will require time and financial resources that may not be available to these competitors.
Key issues in strategy implementation
Implementation of strategies requires cooperation between the management and all employees. Several functional activities need to be carried out if the strategies of an organization are to be achieved (Senguta, 2006). One of the activities includes consistently offering quality products and services to the customers. For Malmaison boutique hotel to build customer loyalty, its employees who make direct contact with the guests must go the extra mile to create a hospitable environment for the customers. Diversification of products needs some changes to be effected in the organization (Griffin, 2006). Training of employees needs to be diversified so that the hotel’s services can incorporate all cultures of the world and still offer the same standards of service. Employees should be well-informed about the cultures of the clients they serve because culture influences eating habits and code of conduct of different people (Ahlstrom, 2009). Understanding the cultures of clients by the employees will lead to customer satisfaction which will in turn create repeat business for the hotel (Harrison, 2009).
Before Malmaison carries out any changes in its strategies, it should all the employees. Communication of the changes is critical as wrong reception of the message may distort the meaning which would hinder strategy implementation in the long run (Hannun, 2007). A good organizational culture should be developed and each person in the organization, management or employee should live up to the expectations of the established cultures (Enz, 2009). A culture defines how activities are carried out in a given organization and defines how people should relate with each other in the process of implementing their duties. The management of Malmaison hotel will be able to put a barrier to new entrants by ensuring that the level of service will never deteriorate. Malmaison boutique hotel should put in place a compensation scheme that acts as an incentive to workers who offer extra service to the hotel. This encourages the employees to continue with the good job. Reward programs are very important to Malmaison boutique hotel. They define who should be rewarded for exceptional work performance (Johnson, 2000).
Malmaison boutique hotel has a very good chance of success. However, its success depends on the effectiveness of choosing generic strategies to drive it as well as strategic development directions. The choice of methods for adopting these directions as well as analysis of implementation issues associated with the chosen strategies will determine the success of Malmaison boutique hotel.