Michael Porter: Operations Strategy At 7 Days Inn

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7 Days Inn
Case Analysis
1. Based on Michel Porter’s views on operations strategy, please analyze how 7 Days Inn obtains competitive advantages by determining the portfolio of services through the vertical cutting approach.

The traditional situation in hotel industry is that, the more you pay, the higher quality you get. But actually, most of the businessman just needs a comfortable bed and a hot water in bath. The vertical cutting approaches make this available and the price is lower than the traditional hotel. With this strategy, 7 Days Inn obtains a great competitive advantages against its competitors and earn the opportunity to the following fast expend.

2. “Management first, franchise later “has been the expansion strategy frequently used by international chain enterprises. However 7 Days Inn creatively come up the “franchising with management “in 2008.Please analyze the network economic effect of chain, and the characteristics and appropriate conditions of leased and operated hotel ,managed hotel and traditional franchised hotel.

The network economic effect of chain benefit 7 Days from 3 angles. Firstly, it reduce the cost of purchase and management. Secondary, it helps to occupy and maximize the market share. Last, it is a good approach to promote the 7 Days brand by open more and more branch hotels.

Lease is a more flexible way to run the business, and it will use less cash flow and get more net income. But the franchising with management approach is a more flexible way for their expend. In this way, they use the investor’s investment and keep the control at the same time. It is a better way comparing with the traditional franchised hotel.

3. 7 Day Inn implements operations dept. management ,matrix management, and shepherd management sequentially to improve the efficiency and effectiveness of chain management. Referring to Amit and Zott(2012),please discuss how an enterprise constantly makes business model innovation ,how to...
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