Managing Business Activities And Models: Analyzing The Eliminate-Reduce-Raise-Create Grid (ERRC Grid) And Blue Ocean Business Model Canvas Of Banyan Tree Phuket

Analysis of Eliminate-Reduce-Raise-Create Grid (ERRC Grid) and Blue Ocean Business Model Canvas

Discuss about the Managing Business Activities and Models.

Hospitality chains around the globe focuses on delivering high quality services to their customers which render high values (Sheehan, 2009). Banyan Tree Phuket is a luxury resort and tourism destination aimed at attracting significant number of customers from around the globe. The resort offers immense values and facilitated stays for global customer base, at the price at which it is offered. It is a 5-Star property which is booked and searched by individuals globally. The scope of this report identifies Eliminate-Reduce-Raise-Create Grid (ERRC Grid) for the Company as well as Blue Ocean Business Model Canvas Strategy Canvas. The analysis of the strategy is done by implementing strategic fit, forming proper and adequate plans for the same. In the strategic fit services and products and features of the resort are analyzed that needs to be eliminated, reduced, raised or created for reaching a competitive position.  At the end there are certain recommendations developed for the resort which it can adopt in order to overcome its current lag in the implications of the strategy (Kim, 2014).

The strategic model aimed at evaluating prominent questions as well as challenges that industry’s strategic logic and established business model of Banyan Tree faces are discussed. this model is focused on creating insight into the current cost structure of the business as against its prominent competitors. Further it also helps attend to various revenue earning sources for the Company. The analysis and comparison made for the Company are against its competitors as Laguna Phuket, Trisara, Amanpuri, Coqoon Spa I, Outrigger Laguna Phuket Beach Resort, Slate formerly Indigo, Bangtao Beach Chalet, Dusit Thani Laguna Phuket and so on (Yang, 2011). In the Strategy Canvas for the Company, the current state of the industry, factors as industry investments, industry level competition and customer perception of competitors edge is analysed.

Eliminate: Factors within the industry that can be eliminated includes price, 5-Star performance location. The till date strategy for the Company was focused on promotional strategy aimed at price, location and 5-Star performance. While the resort is based at the centralized and easily accessible location at Phuket, its core strategy while attracting customers from various parts of the world has been focused on that criterion. Especially while promoting in USA or Europe, the resort has adopted this strategy, as customers from that segment want to avail a resort that is nearer to the sea and is located at Phuket. Being in the 5-Star segment its continuous promotions has been to attract targeted customer group from upper class segment that will prefer stay at the location. Further pricing strategy for the resort has been always attractive to this segment as against the value proposition it offers. The resort needs to eliminate all these factors in its promotional strategy and adopt a new strategic fit for developing and addressing new customer group and industry developments. Major focus of the customer has shifted and these factors as location, price, 5-Star rating category no longer offers value to the proposition. The offerings provided by the resort are at part with other resorts in the same category with similar service offerings. Though it is highly accredited and famed resort but barely there is a value proposition that can set it apart from other resorts in the similar category.

Eliminate: Factors within the Industry

Raise: The various factors that the resort should consider raising above industry standards are variant restaurants, spa services, tourism and sports options, adventure sports on beach. The resorts rooms, restaurants, playground, swimming pool and other additional features are highly liked and appreciated by its target customer group. It can further raise its level of service provided to its customers by way of exclusive employee designation to specific customer. An employee per guest can be allocated, who will be taking care of the guest along with other support staffs. Further the resort can also add significantly to its existing Chefs lists that will cater to its each customer. A Chef designated to serve each customer will provide pampering and special benefit to the customer group segment. The resort can significantly raise its current standards pertaining to restaurant services it offers. It has various restaurants varying from continental, to Thai and other international cuisines with highly accredited Chefs, who offer a variety of platters. It needs to further analyze the customer segment that comes to the restaurant and then adopt more culinary delights that can surprise as well as please customers. The additional services that the resort needs to raise are in regards to its SPA services, tourism programs and sports options. The resort offers several sports options as golf, tennis but it needs to add on adventure type sports in its Andaman Sea beach as banana rides, sailing and so on. Such additional services will highly delight customers staying at the resort.  

Reduce: The resort needs to reduce its operational costs and leases as well as rents. In order to facilitate services to customers, the resort hires various services. The resort currently offers its pick up and drop services from the airport through rented and leased services. Other tourism programs of the resort are also offered through such leased companies, which charge hefty fees for the same. The resort needs to purchase its own service vehicles as well as other services in order to reduce its existing operational costs. The resort also pays various types of rents for various amenities it offers its customers. Such amenities need to be directed at by the resort. The resort needs to further reduce its various operational costs in terms of salaries. As the resort purely performs on seasonal basis and during off-seasons there are barely any guests which the resort needs to cater to, it can keep staffs for house-keeping purposes on rotational basis or part-time basis. Recruiting part-time local staffs will value add significantly to the business offered by the chain and also impact its profitability significantly by creating additional revenues.

Raise: Factors to Consider Raising Above Industry Standards

Create: In order to offer value proposition to its existing set of customers, increase brand loyalty and attract more number of customers, it needs to create more additional choices and options. Value addition for the resort can be achieved once it starts offering sports facility and adventurous offerings to its customers. It needs to offer a complete packaged stay to its customers at its resort such that it can enhance its competitive advantage. Whereas other resorts are trying to add values to their already existing capabilities, Banyan Tree can emerge as a market leader in case its adopts this strategy. In order to innovate products and services for its guests the resort can undertake analysis pertaining to each and every guests. Such data feedback from individual guests will help in studying their likes as well as dislikes; this will help them serve better. Employees at the back end of the resort need to be recruited who will analyze and design services according to meet guest demands in a better way. Such analysis will further help sort services for guests and not indulge in excessive spending regarding the same.

Conclusion

Eliminate-Reduce-Raise-Create Grid Blue Ocean Business Model Canvas helps at attaining suitable strategic fit for a business. Such strategy allows for extending of existing capabilities and eliminating those which no more seem to add value to the business. Reducing the factors that add on to costs for the company and impacts business profitability needs to be reduced. Further raising those factors that are capabilities of the Company and deliver high levels of profitability is significantly important. In case the company wants to emerge as a leader in the market and cerate sustainability for its business it needs to innovate processes or services that can add value to the business significantly. For the case of Banyan Tree such a grid allowing for diagnosing problems or challenges the business is facing and to overcome the same is incorporated. The resort needs to redesign its strategy and promotional plans in order to attract new customers from its focus groups. The resort needs to further do brainstorming sessions with its employees and other in-house staffs in order to better understand customer needs and demands such that they can be adequately met. This will allow the resort to emerge as a significantly leading resort in the sector. The resort will be highly competitive from these endeavors as well.

Reference Lists

Johnson, M.W., Christensen, C.M. and Kagermann, H., 2008. Reinventing your business model. Harvard business review, 86(12), pp.57-68.

Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries, game changers, and challengers. John Wiley & Sons.

Kim, W.C. and e Mauborgne, R., 2014. Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.

Sheehan, N.T. and Vaidyanathan, G., 2009. Using a value creation compass to discover “Blue Oceans”. Strategy & Leadership, 37(2), pp.13-20.

www.banyantree.com, Retrieved on 23rd January 2017. Banyan Tree. https://www.banyantree.com/en/ap-thailand-phuket-resort.

Yang, C.C. and Yang, K.J., 2011. An integrated model of value creation based on the refined Kano’s model and the blue ocean strategy. Total Quality Management & Business Excellence, 22(9), pp.925-940.