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    



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 stakeholders
  • Illustrate strategic, operational and marketing challenges faced by managers
  • Demonstrate 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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