Value Chain Analysis
Key Success Factors
Hong Kong-based Shangri-La Hotels and Resorts is Asia Pacific's leading luxury hotel group and regarded as one of the world’s finest hotel ownership and management companies. The Shangri-La story began in 1971 with its first deluxe hotel in Singapore. Today, there are 71 hotels and resorts throughout Asia Pacific, North America, the Middle East, and Europe, representing a room inventory of over 30,000. In addition, new hotels are under development in Austria, Canada, mainland China, India, Macau, Philippines, Qatar, Turkey and United Kingdom.
The purpose of this report is to provide a strategic analysis of Shangri-La Hotels and its rapidly expanding business of luxury hotels into Eastern China, Europe, North America, and Australia; while still holding on to Shangri-La’s signature standards of “Shangri-La Hospitality.” My analysis supports the recommendation that Shangri-La hotels have the required resources, expertise and efficiencies to successfully expand into these markets even with the tight labor markets and vast cultural differences
Shangri-La Hotels is attempting to expand its business into other countries; however, expanding into high-wage economies’ such as Europe and North America could tarnish their brand and lead to a reduced overall profit.
Political – little impact in Canada, however foreign companies may restrict trade or impose tariffs, thus increasing costs. Free trade may help or hinder companies. Favorable taxation or subsidies in other countries may assist competitors. Economic – Collectivity stage and needing to delegate (marketing). Interest rates, currency fluctuations and unemployment are factors. Social and Cultural – Foreign interest in products could be a fad. Advantage is quality. Technological – improved production/packaging technology needed Environmental- could focus on recyclable, reusable packaging. Legal- Foreign sales may require changes or inter-provincial sales may result in abiding by various provincial regulations.
| Test| Competitive Implication| Performance Implication| Valuable| Does the resource or capability allow the firm to meet a market demand or protect the firm from market uncertainties| The product itself doesn’t protect the firm from uncertainties. The marketing concept of a healthy product, charming PEI and authentic ‘goodness’ is the competitive edge.| Protecting the branded image and promotion is important in sustaining the market position and increasing this position. | Rare| Assuming the resource or capability is valuable, is it scarce relative to demand? Or is it widely possessed by most competitors| The preserve product can be copied. Strawberry jam has the most demand and supply meets demand in N America. Unique product combining high fruit content and liquors.| Product is easily copied; therefore it is important to differentiate from the competition with use of specific formulas of ingredients to have a unique taste. | Inimitable and non substitutable| Assuming a valuable and rare resource how difficult is it for competitors to either imitate the resource or capability or substitute for it with other resources and capabilities that accomplish similar benefits| Preserve resource is not rare.The culture of home made natural image in the PEI setting is the rarity and could be substituted but countered with its original/ authentic brand.| Product is easily copied, so value must be in packaging/image/marketing appeal.| Exploitable| For each set of the preceding steps of the VRINE test, can the firm...