To meet the demands of the current world, organisations are adopting new ways of conducting operational systems, most popular of these new systems are decision management systems as exhibited by StayTogether, a merger between ten hotel chains (DMS, 2017). Now, this report offers a critical analysis of the decisions taken in the organisation of management systems and technology to combat the existing market pressure particularly those that have been brought on by the demand of low hotel prices. Moreover, this report will outline the four main management decisions proposed and that are set to affect the brand, customers and the company’s continued patronage. Furthermore, as a final assessment, this report will then offer recommendations on ICT systems that could provide a competitive advantage. In the report the following assumptions are made; customers are literate and have a basic understanding of ICT system and IS systems are internally made.
Management at any level of an organisation must make critical decisions of an organisation. However, the decision taken may vary based on the level of business as well as the goals of the foreseeable changes as a result of the decisions (Johnson, 2017). StayTogether outlines four key management decisions that to them will help them achieve their business objective to attract and retain customers as well as improve their overall revenues. Let’s analyse the feasibility of each of these decision strategies.
A simple idea is usually presented by loyalty schemes, essentially an organisation like StayTogether engages and rewards its loyal customers to enhance their experience with the company i.e. the brand. Moreover, it usually stands to increase revenues as it generates more profits as compared to any other marketing strategy due to the relationship formed with the customers (bLoyal, 2016). Furthermore, the customers develop a sense of belonging to the organisation creating a true sense of ownership which pushes them to promote the brand to their friends and families increasing the customer base.
In addition to this, loyalty schemes have proven to work in the past, for instance, Starbucks (restaurant franchise) owe their huge sales to loyalty programs that are known to increase their revenues by over 10 percent each year (Starbuck fiscal result, 2013). So, why do they work? Loyalty schemes and programs increase customer’s purchase behaviours by motivating them with rewards. Secondly, they engage returning customers, who according to recent studies spend 67 percent more than new customers (bLoyalty, 2016). Thirdly, they increase consumers understanding in their endeavour to find product preferences with higher loyalty rewards. Finally, they increase the word to mouth program which in end serves a good referral avenue.
This business strategy as proposed by StayTogether management offers some serious challenges and would take critical analysis and evaluation to meet the objectives set by the organisation. For one, the customers regardless of who they are will expect to have more (food) than what they pay. Yes, the buffet is free but it’s initially covered in the billing of staying in the hotel. Therefore, a customer will always take advantage to get something extra than what they paid. On the other hand, amount consumed should never surpass the amount paid or the average amount estimated by the hotel otherwise they stand to make a loss (Ozimek, 2012). Therefore, a compromise of the two must be made while assuring the customer they are in control of their meal choices.
As a solution to this dilemma or problem, an adverse selection process can be used whereas suggested by StayTogether management, the buffet prices are included in the hotel prices and charged a fixed rate that is at a maximum but fair price. Essentially, the new business cannot tell the amount of food consumed by each individual i.e.; below average, average or above average. Nevertheless, through the advance technique, the customer can get to feel appreciated by being offered an incentive in the form of a meal even though they cater to it indirectly. This strategy defiantly boosts customer experiences who highlight the free meals as a reason to interact with the organisation (Savolainen, 2010).
A crucial pricing strategy that can either raise or lower a company’s profit margins, suppose StayTogether lowers its overall prices for meals or exclusive hotels. Two things are set to happen, one customer will expect the same in all avenues of the hotel and the competitors will also lower their prices to meet the market demand (Tandon, 2017). In the end, the business loses, however, some special rebate agreements can be made to boost sales while beating the competition. For one, StayTogether could develop a package mix incentive where a prolonged stay warrants an extra meal or stay in the hotel. This strategy changes customer’s behaviours and purchases patterns who would otherwise spend less (Butt, 2016).
CSR as it commonly known is an organisation’s responsibility to consider and enhance the interest of the customers, employees, communities and business stakeholders. Moreover, organisations must consider the environment as a factor in business strategies not only to boost their image but also as a sustainability endeavour that integrate good social values. Nevertheless, StayTogether initiative to engage the surrounding communities and staff can help improve its image across the board as customers want to be affiliated with socially conscious organisations (Davis, 2017). Furthermore, CSR is no longer an option by a mandatory obligation due to the awareness developed by the public in recent years on environmental issues. Therefore, StayTogether social responsibility will enhance their relations with their customers, employees and immediate environs which will serve as a good promotional activity.
ICT has drastically changed the way of doing business, today the digital world offers an extended environment to conduct business such as web pages where companies can promote and sell their products/services. For StayTogether, these systems are a mandatory requirement especially information systems (IS) that will allow customers and employees to interact with the organisation’s facilities. IS such as enterprise resource planning will govern operational activities within the organisation while system such as CRM (customer relationship management) will govern the relationship with the customers. On the other hand, IT will provide the framework or foundation to execute these operations through networking systems such as the internet (Timms, 2011).
Nevertheless, while meeting its objective the company will have to contend with issues to do with licencing of the IS products that in most case require regular renewals as well as maintenance. Moreover, they will need competent experts to manage their IT infrastructure which may cause sustainability problems due to frequent changes caused by customer preferences and market changes. Furthermore, the organisation spans multiple locations which use different languages and data formats which will make analysis difficult to achieve. Finally, the company will have to contend with the literacy shown by the customers who will sometimes lack the technical know-how to interact with their systems e.g. those of booking hotels.
Conclusion/Recommendation
Business strategies such as rebates call for automated services to cater for client needs, in essence, you cannot have an employee calculate the rebate values based on the customer’s expenditure. Therefore, StayTogether should employ automated systems that evaluate customer’s expenditures at all levels. This outcome can be easily met using BI systems that optimise operations using data mining techniques and dashboards that forecast market environments. Moreover, the company can engage IS such as ERP, CRM and even SCM (Supply Chain Management) to optimise resources and operation activities.
As a result of this automation endeavour, the company can increase its revenue avenues by engaging more customers across different platforms such as social media where user traffic is at accelerated rate. Moreover, they expose the business to other future prospects such as automated hotel tours and personalised user accounts that offer one-on-one correspondence with customers which in the end boost customer relations.
References:
Butt. A. (2016). Pricing Strategies – Top 7 Types of Rebate Deals. Deal track. Retrieved 09 May, 2017, from: https://blog.deal-track.com/pricing-strategies-top-7-types-of-rebate-deals
BLoyal. (2017). Why Loyalty Programs are Essential for Every Retailer. Retrieved 09 May, 2017, from: https://www.bloyal.com/loyalty-programs-essential-for-every-retailer/
Davis. S. (2017). Examples of Social Responsibility Strategies. Chron. Retrieved 09 May, 2017, from: smallbusiness.chron.com/examples-social-responsibility-strategies-10633.html
DMS. (2017). Decision Management Systems Platform Technologies Report. Retrieved 09 May, 2017, from: https://www.decisionmanagementsolutions.com/decision-management-platform-technology/
Johnson. S. (2017). Levels of Management Decision Making. Chron. Retrieved 09 May, 2017, from: https://smallbusiness.chron.com/levels-management-decision-making-58222.html
Ozimek. A. (2012). The Economics of All-You-Can-Eat Buffets. Forbes. Retrieved 09 May, 2017, from: https://www.forbes.com/sites/modeledbehavior/2012/05/23/the-economics-of-all-you-can-eat-buffets/#3cbda99c1d6a
Savolainen. T. (2010). Improving customer loyalty through a regular customer program. Final thesis report. Retrieved 09 May, 2017, from: https://theseus32-kk.lib.helsinki.fi/bitstream/handle/10024/16386/Savolainen_Teemu.pdf?sequence=2
Starbuck Corporation. (2013). Fiscal 2013 annual report. Retrieved 09 May, 2017, from: https://s21.q4cdn.com/369030626/files/doc_financials/2013/Starbucks-Fiscal-2013-Annual-Report-FINAL.PDF
Tandon. D. (2017). How to Transform Your Sales Rebate Strategy from Problematic to Profitable. The Kini group. Retrieved 09 May, 2017, from: https://thekinigroup.com/sales-rebate-strategy/
Timms. J. (2011). Introduction to business and management. Undergraduate study in
Economics, Management, Finance and the Social Sciences. Retrieved 09 May, 2017, from: https://www.londoninternational.ac.uk/sites/default/files/programme_resources/lse/lse_pdf/subject_guides/mn1107_ch1-4.pdf
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