We
Are So Sorry: Sedang Prestige Resort
The international hospitality
industry by design is highly visible and at the forefront of the internationalization
process. Extensive research has been conducted into country and firm specific
advantages and how these affect North to South market entry strategy. Research
into how competitive strategy from the "South" reacts and evolves to
counter North to South market entry has developed more slowly.
The teaching
case study " We
Are So Sorry: Sedang Prestige Resort" aims to present the different strategic
moves undertaken by stakeholders in a North-South partnership in emerging
nation settings told from the point of view of customers as they consume the
value proposition. Case study and teaching note are available at Ivey
Publishing, University of Western Ontario: https://www.iveycases.com/ProductView.aspx?id=53743
Abstract
North American and European branded
hotel chains in their quest to maximize shareholder wealth have recently shed
off ownership of assets and freed up capital to focus on their core businesses
with the help of strenuous contracts. The ensuing pursuit of further business
development has expedited the internationalization process and a new business
model of franchising the brand/value proposition in international locations has
evolved.
Globally accepted brands hold the premise of global quality. It is widely
believed that Western brands deliver more value than brands from emerging
nations for which they can charge global prices to global customers. Service
delivery failure is encountered frequently in the accommodation and food
services industry. The level and frequency of service delivery failure can act
as an important performance measurement criteria. Managers are taught how to
recover from service delivery failure and address loyalty issues of existing
customers as they fear losing them and as the cost of acquiring new customers
may exceed the cost of keeping existing customers.
The case study illustrates how a globally branded North American hotel chain
disregarded the basic tenants of maintaining the global brand promise, ignored
generally accepted North American customer service standards, failed to
instigate delivery failure recovery and leveraged firm specific capabilities to
maximize shareholder wealth. The reaction of the local counterpart, the
reaction to countermand the imbalance in the ensuing business relationship and
adaptation of the value proposition are told from the perspective of a
vacationing couple that experienced the diluted brand firsthand.
Learning Objective:
Showcase internationalization
challenges as experienced by foreign and local stakeholdersIllustrate strategic,
operational and marketing challenges faced by managersDemonstrate why managers may
make decisions and act counter to accepted business principles and theory
and why this may seem attractive and deliver results in the short run
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