TRM 212

Hotel Management Technology Applications

Topic 2. Using Information Technology for

Competitive Advantage
Interview

 Elizabeth Lauer Ivey

Senior Information Technology Strategist
HVS International
Interview

 Defines Competitive Advantage as:

A property’s (or chain’s) ability to attain and maintain a
strong bottom line.
 Examples:

 Efficient Reservation System

 Lower operating overhead
 Guest recognition system
What is Competitive Advantage

… a basis for the firm’s long term success?

… a basis for value creation?

Do we really know where it resides?

Can it be sustainable?
What is Competitive Advantage

“When two or more firms compete within the same market,

one firms possesses a competitive advantage over its rivals
when it earns a persistently higher rate of profit (or has the
potential to earn a persistently higher rate of profit)” (R.
M. Grant, 2000)
Types of Competitive
Advantage
 Competitive strategies
by Porter

Cost Leadership Differentiation

Industry-wide
Market Focus with Low Cost Focus with
Differentiation
Niche

Hybrid strategies can be more effective

 Features of Competitive
Advantage
Cost Leadership Differentiation
Efficient scale Quality
Standardization Innovation
Design for low production Design
Credibility
cost
Brand name
Control of overheads and R&D Reputation
Avoid marginal customers Environmental posture
Customer service
Integrated services
Differentiation: Airline Seats
Destination Differentiation
Destination Differentiation
Destination Differentiation
Destination Differentiation
Destination Differentiation
Destination Differentiation
Destination Differentiation
Technology Takes Center
Stage
 Convergence: The coming together of numerous
technologies to make great things happen.
 Digital Convergence
 Miniaturization (transformation of mobile and Pcs)
 Portability
 Declining Costs
 Push Technology
 More Powerful Applications
Technology Takes Center
Stage
Info
rma
tion
Tec
hno
logy

Telecommunication and Telephony

Interactive, Multimedia Content

ia
dcas t Med Digital Economy
Broa
Sustainable competitive
advantage
 What is meant by sustainable competitive advantage?
 Durable
 Valuable to the firm
 Exploiting weaknesses and neutralizing threats
 Unique
 Difficult for competitors to imitate
 Not easily substitutable
May competitive advantage be
sustainable?
 Increasedcompetition leads to decrease of differences
in competitive advantage
 Standardization/ mass production of unique features:
What can be left for differentiation?
 Unique features of differentiation become prerequisites
for survival
 Dynamism & complexity of the environment
 Limited edition
How can competitive advantage
be sustainable?
 Thefirm must seek competitive advantage in
combining resources & capabilities
 Develop resources and capabilities, which are rare,
valuable, non-tradable,
 Make those resulting competences sustainable by
prohibiting imitation or substitution by competitors
 The firm must offer competitive products
Factors Contributing to Hospitality
Extraordinaire Competitive Advantage
 Technology infrastructure and IT portfolio
 Human capital
 Corporate structure and culture
 Financial capital
 Size of the institution in the industry
 Geographic dispersion
 Market penetration
 Brand recognition and repotution
Factors Contributing to Hospitality
Extraordinaire Competitive Advantage
 Customer loyalty
 Franchise relationships and contracts
 Operating standards and practices
 Service delivery
 Product quality
 Value add programs
 Negotiating power with suppliers
Competitive Analysis

 The process of identifying key competitors; assessing

their objectives, strategies, strengths and weaknesses,
and reaction patterns; and selecting which competitors
to attack or avoid.
Steps in Analyzing
Competitors
Competitors MAP
Hypothetical Market
Structure
Competitive Strategy

 Expanding the total demand

Competitive Positions  Finding new users
 Discovering and promoting
new product uses
Market Leader  Encouraging greater product
usage
Market  Protecting market share
Challenger  Continuous innovation

Market Follower  Expanding market share

 Profitability rises with market
Market Nicher share
Competitive Strategy

 Option 1: challenge the

Competitive Positions market leader
 High-risk but high-gain
 Sustainable competitive
Market Leader advantage over the leader is
key to success
Market  Option 2: challenge firms of
Challenger the same size, smaller size or
Market Follower challenge regional or local
firms
Market Nicher  Full frontal vs. indirect
attacks
Pepsi is an
example of
market
challenger
that has
chosen to use
a full frontal
attack
Competitive Strategy

Competitive Positions  Follow the market leader

 Focus is on improving profit
instead of market share
Market Leader  Many advantages:
 Learn from the market
Market leader’s experience
Challenger  Copy or improve on the
Market Follower leader’s offerings
 Strong profitability
Market Nicher
Competitive Strategy

 Serving market niches means

Competitive Positions targeting subsegments
 Good strategy for small firms
with limited resources
Market Leader  Offers high margins
Market  Specialization is key
By market, customer, product, or
Challenger

marketing mix lines
Market Follower
Market Nicher
Thank You