According to renowned business experts Puseljic, Skledar and Pokupec (2012), organisations will either succeed or disappear from the market based on the decisions made by managers. In fact, the quality and standards of the decisions they make outline the operational structure of an organisation which determine the future prospect of the system. In this case, therefore, decision making is seen as a crucial and basic function of an organisation management particularly a profit based business such as the one at hand. StayTogether is a merger of ten different hotels caused by the existing market pressures. In such a scenario, the decisions taken by the management to attract new customers while maintaining its patronage and brand are highly critical.
Furthermore, the new company faces intense competition from the existing rivals which majorly causes it to shift focus to the customers in an attempt to realise their requirements thus offer better conditions. Moreover, their proposed changes which serve as strategic business decisions are highly dependent on information technology where systems such as online portals are set to be used as booking facilities for the services provided. In essence, these systems require as a solid foundation in the form of business models such as the four outline decisions in order to operate successfully (Yu, To & Lee, 2012). However, they too (IT and IS) faces many challenges as will be highlighted in this report.
In this report, the following assumptions are made; one, the proposed technological system are designed based on the existing business condition and by the internal IT personnel. Two, all users are conversant with technological systems such as websites and online portals.
StayTogether proposes four major decisions; offering loyalty rewards to their loyal customers, free meals (breakfast and dinner buffets), rebates on travels when using the organisation’s chosen carriers and engaging in social responsibility. These decisions serve as a plan that anticipates the present and future market conditions. In all, they seem to focus on the customer and not the market nor the competitors. In itself, this is an anticipative strategic plan that tries to predict the conditions, measure and objectives of the future through consumer centred outline (Acemoglu, Bimpikis & Ozdaglar, 2014). So, how feasible are these decisions?
Businesses that operate in mature markets are always faced with the problem of presenting customers with new ideas that have not been seen before. The Hotelling industry is one of these fields that forces the participants to constantly reinvent themselves and loyalty programs are such ideas that constantly renew the desire of the customers (Akkhtar, 2015). Moreover, they motivate customers to stay with an organisation despite the emergence of new businesses in the same field. One notable advantage presented by loyalty programs is the edge they offer on price battles. This outcome is seen because consumers heavily bond with an organisation in an attempt to earn more rewards which increases their spending while increasing the referrals given by the satisfied customers.
Furthermore, consider the statistics, according to Akkhtar (CEO Reward port, 2015), loyalty programs and schemes are known to generate over 20 percent of businesses profits when properly implemented. Moreover, a recent study by Data Candy (2013), outlined that 60 percent of all consumers spend in businesses that have loyalty programs. In addition to this, 84 percent of consumers will visit enterprises hosting rewards schemes to get more services or products. Therefore, the decision to incorporate loyalty programs in StayTogether’s business operations will only increase their customer base by promoting their brand to their existing customers as well as new ones who they are set to acquire.
Marketing is a challenging aspect of a business that can yield good results if properly applied. StayTogether decision to offer free meals as part of the hotel prices is an innovative way of increasing the price of accommodation while facilitating an extra service to the customer. In essence, marketing is meant to invoke the curiosity of the customer who then becomes interested in trying new products or services (Karppinen, 2011). Although the meals are stated as free in the marketing plan, this service is paid for in the accommodation prices which raises amount earned from each guest while maintaining some sort of reward to the customer. Moreover, when faced with the choice between a competitor and StayTogether a new customer is more likely to pick the latter owing to the reward programs highlighted i.e. the first loyalty programs and now free meals.
Nevertheless, this management decision should also outline a proper implementation strategy as it may fail to meet its objectives if the service offered supersedes the total amount paid by the customers. In other meal payment programs such as pay, as you eat, the organisation is able to manage the content given to customer based on the amount paid. However, open buffets as outlined by StayTogether may cause challenges since the business is unable to govern the quantity nor product taken by the customer. Therefore, a holistic plan that applies a maximum fee payment plan should be outlined regardless of the consumer to ensure the payment (for accommodation) are always above the service offered. This plan is the only way that the organisation will be able to reach its objective (Boulding, 1994).
When faced with adversity, most organisations will seek innovation as a strategy to beating the existing problems. Indirect sale strategy such as rebates are good examples of practical sales innovation that are known to increase the sales of a business by providing customers with the discretion of choosing prices (High Tech, 2016). This strategy is vital in the modern market where customers have a wide range of demands including differing preferences which in most cases are governed by the price tags. StayTogether proposes an idea of giving customers credit if they travel with the carriers affiliated with it. In return, the customer can redeem the credit in the form of meals or free night accommodation. Now, consider a price sensitive customer who wishes to stay in a hotel for a day or two (due to the price) but can extend his stay if he uses a certain service. This customer is likely to invest in the service proposed by StayTogether to get the free night.
Therefore, rebates will give customers a sense of control where their fate lies with their own actions i.e. spending preferences. Moreover, rebates can help StayTogether attain certain price margins based on the demands given by the customers. Therefore, unlike other discount strategies, the company will be able to offer extended rewards while limiting the number of users who partake in the venture. This outcome clearly outlines the reasons why rebates are more popular amongst suppliers (Hotel in this case) as they offer more control. On the other hand, the customers can receive unlimited rewards provided they put extra effort on their spending practices (Silk & Janiszewski, 2004).
An organisation’s social responsibility defines the relationship held with the surrounding systems/conditions, this includes the environment, employees, community and customers. Moreover, it outlines the role of the organisation in meeting the sustainability goals of the world more so, in an era faced by global warming and a wide wealth gap (Crowther & Aras, 2008). Furthermore, there are the debates of ethical dilemma and issues which generally showcases the abstract nature of the concept. Nevertheless, for an organisation of StayTogether magnitude, social responsibility is not a supplementary function but a compulsory mandate. This because it outlines the values held by the business as well as the concern it holds for the environment.
StayTogether outlines a conscious endeavour where customers are given the chance to give back to the community in the form of donations to chosen charities. In itself, this initiative will encourage customers to spend more when they can to increase the value of the 1 percent given to those in need. Moreover, it gives the consumers a sense of fulfilment in that they feel good about the actions they take which encourages them to interact with the facilitating organisation. Finally, it encourages the employees to have good moral and ethical standards while conducting their duties (Rangan, Chase & Karim, 2012).
Information technology (IT) serves as the foundation of businesses today as it provides a new and improved environments (digital) to conduct business. Moreover, IT offers the necessary resources to host information systems, solutions that manage and monitor enterprises’ operational activities (Ghobakhloo, Hong, Sabouri & Zulkifli, 2012). StayTogether has identified a problem with the existing system where a range of third party websites is used to book the hotel’s facilities. These websites tarnish their brand and instead an internal website is proposed. Although beneficial this new system supported by both IS and IT structures will face a number of challenges as a result of the existing technological issues.
First, the website will depend on IS that integrate the organisation’s operations with the service provided. Therefore, the organisation will have to contend with the users who are unable to operate the booking facilities which in the end may frustrate the customers lowering their clientele base. Moreover, this outcome will discriminate against older customers who are less acquainted with technological systems. Furthermore, merging IS will be another issue faced by the organisation as these systems will span multiple locations. On the other hand, IT systems will have resounding challenges in integrating data and policies from different countries. Furthermore, due to the volatility of the market, the system will have constant changes which present both a management and compatibility challenge (NCC, 2010).
In the end, IT challenges may lower the analysis solutions adopted by the organisation in an attempt to understand their customers which may push them to use intuition or market conditions to make decisions. This outcome may lower their brand as they will align with the market norms. Moreover, as stated before, if the new information systems led by the new website contain too many changes some loyal customers may switch service providers so as to align with the new conditions.
The management decisions outlined by StayTogether are valid and well founded because they hold a realistic chance of meeting the company’s objective. For one, they primarily shift the focus of the organisation to the customers which display market independence a verified concept of beating the competition in a highly competitive market. Secondly, they capitalise on the resources owned by the organisation i.e. restaurant in hotels and travel agencies or carriers affiliated with the company. Therefore, in building the bigger brand, the business also builds the smaller enterprises. Nevertheless, the proposed reward and loyalty programs should be clearly defined to increase revenues and not expenditures.
On the other hand, StayTogether should employ other modern technologies and facilities to improve their business activities. For instance, the website proposed should be supported by a strong CRM (customer relationship management) system to enhance the relationship formed with the clients. Moreover, this system can also be integrated with an ERP system (enterprise resource planning) to manage the company’s resources including personnel to provide optimal business operations. Finally, the affiliated businesses including suppliers and transport companies can be governed by SCM systems (Supply chain management) that monitor as well as manage input facilities. In the end, this integrated system will result in an efficient organisation supported by seamless operations. In addition to this, it will facilitate other business ventures such as real-time tour guides as well as personalised travel portals to hold user information and data e.g. picture and videos.
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