Harvard Case - We Are So Sorry: Sedang Prestige Resort
"We Are So Sorry: Sedang Prestige Resort" Harvard business case study is written by Jim Kayalar. It deals with the challenges in the field of General Management. The case study is 11 page(s) long and it was first published on : Mar 13, 2012
At Fern Fort University, we recommend a comprehensive revitalization strategy for Sedang Prestige Resort, focusing on rebuilding trust, enhancing guest experiences, and driving sustainable growth. This strategy involves a multi-pronged approach encompassing brand management, operational improvements, marketing and communications, employee engagement, and corporate social responsibility.
2. Background
The case study 'We Are So Sorry: Sedang Prestige Resort' highlights the crisis faced by a once-renowned resort in Vietnam. After a series of negative incidents, including food poisoning and a fatal accident, Sedang Prestige Resort suffered a drastic decline in customer satisfaction, bookings, and revenue. The resort's reputation took a severe hit, leading to a loss of trust and confidence among guests.
The main protagonists are the resort's management team, led by Mr. Nguyen, who are tasked with navigating this crisis and restoring the resort's former glory.
3. Analysis of the Case Study
Strategic Analysis:
- SWOT Analysis: Sedang Prestige Resort possesses strengths such as its prime location, beautiful natural surroundings, and existing infrastructure. However, weaknesses include a damaged reputation, operational inefficiencies, and a lack of clear brand positioning. Opportunities lie in tapping into the growing tourism market in Vietnam and leveraging digital marketing. Threats include competition from other resorts, economic fluctuations, and potential future incidents.
- Porter's Five Forces: The resort operates in a competitive industry with numerous competitors. The bargaining power of buyers is high due to the availability of alternatives. The threat of new entrants is moderate, while the threat of substitutes is high. The bargaining power of suppliers is low due to the availability of numerous suppliers.
- Competitive Advantage: Sedang Prestige Resort needs to differentiate itself through unique offerings, personalized experiences, and a strong focus on safety and hygiene.
Financial Analysis:
- Revenue Decline: The case study highlights a significant drop in revenue due to the decline in bookings. This necessitates a thorough financial analysis to understand the extent of the financial impact and develop a recovery plan.
- Cost Optimization: The resort needs to optimize its cost structure by identifying areas for efficiency improvements, streamlining operations, and negotiating better deals with suppliers.
Marketing and Communications Analysis:
- Brand Damage: The negative publicity has severely damaged the resort's brand image. A comprehensive brand management strategy is needed to rebuild trust and restore confidence.
- Digital Marketing: The resort needs to leverage digital marketing channels to reach a wider audience, target specific demographics, and manage online reputation.
Operational Analysis:
- Safety and Hygiene: The resort must implement stringent safety and hygiene protocols to prevent future incidents. This includes rigorous staff training, regular inspections, and adherence to international standards.
- Guest Experience: The resort needs to focus on enhancing the guest experience by providing personalized services, creating memorable moments, and exceeding expectations.
Human Resource Management:
- Employee Training: The resort needs to invest in comprehensive training programs for all employees, focusing on customer service, safety protocols, and crisis management.
- Employee Engagement: Creating a positive and supportive work environment is crucial to foster employee engagement and ensure a high level of service.
4. Recommendations
1. Rebuilding Trust and Reputation:
- Transparency and Apology: Publicly acknowledge the mistakes and apologize sincerely to affected guests and the public.
- Compensation and Support: Offer appropriate compensation to victims and provide ongoing support to ensure their well-being.
- Independent Audit: Conduct an independent audit of safety and hygiene protocols to demonstrate commitment to improvement.
- Public Relations Campaign: Launch a comprehensive public relations campaign to rebuild trust and communicate the resort's commitment to excellence.
2. Enhancing Guest Experience:
- Personalized Services: Offer tailored experiences based on guest preferences and needs.
- Unique Offerings: Develop unique activities and experiences that differentiate the resort from competitors.
- Technology Integration: Implement technology solutions to enhance guest convenience, communication, and satisfaction.
3. Operational Improvements:
- Safety and Hygiene: Implement a robust safety and hygiene management system, including regular inspections, staff training, and adherence to international standards.
- Efficiency Enhancements: Streamline operations, optimize resource allocation, and implement lean management principles to improve efficiency.
- Supply Chain Management: Strengthen the supply chain by sourcing high-quality ingredients and products from reliable suppliers.
4. Marketing and Communications:
- Brand Repositioning: Develop a clear brand positioning that emphasizes safety, quality, and personalized experiences.
- Digital Marketing Strategy: Implement a comprehensive digital marketing strategy to reach target audiences, manage online reputation, and drive bookings.
- Social Media Engagement: Actively engage with customers on social media platforms to build relationships and address concerns.
5. Employee Engagement and Development:
- Training and Development: Invest in comprehensive training programs for all employees, focusing on customer service, safety protocols, and crisis management.
- Employee Recognition: Implement a system to recognize and reward employees for their contributions and commitment to excellence.
- Leadership Development: Develop leadership skills among managers to foster a positive work environment and promote employee engagement.
6. Corporate Social Responsibility:
- Sustainability Practices: Implement sustainable practices throughout the resort, reducing environmental impact and promoting responsible tourism.
- Community Engagement: Develop programs that benefit the local community and promote positive relationships.
- Ethical Business Practices: Adhere to the highest ethical standards in all business operations.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of the case study, considering:
- Core Competencies and Consistency with Mission: The recommendations align with the resort's core competencies and its mission to provide exceptional guest experiences.
- External Customers and Internal Clients: The recommendations focus on addressing the concerns of both external customers (guests) and internal clients (employees).
- Competitors: The recommendations consider the competitive landscape and aim to differentiate the resort from competitors.
- Attractiveness ' Quantitative Measures: The recommendations are expected to lead to increased revenue, improved profitability, and enhanced brand value.
6. Conclusion
By implementing these recommendations, Sedang Prestige Resort can effectively address the crisis, rebuild trust, enhance guest experiences, and drive sustainable growth. The resort's success will depend on its commitment to transparency, accountability, and continuous improvement.
7. Discussion
Alternatives:
- Selling the Resort: This option would involve significant financial implications and potentially lead to job losses.
- Limited Response: A limited response, such as offering apologies and discounts, may not be sufficient to rebuild trust and restore the resort's reputation.
Risks:
- Implementation Challenges: Implementing the recommendations effectively will require strong leadership, commitment from all stakeholders, and effective communication.
- Competition: The resort faces significant competition from other resorts in the region.
- Economic Fluctuations: Economic downturns or travel restrictions could impact the resort's performance.
Key Assumptions:
- The resort's management team is committed to implementing the recommendations.
- The resort has the financial resources necessary to implement the changes.
- The tourism industry in Vietnam will continue to grow.
8. Next Steps
- Immediate Actions: Publicly apologize, offer compensation to victims, and conduct an independent audit.
- Short-Term Goals: Implement safety and hygiene improvements, enhance guest experiences, and launch a public relations campaign.
- Long-Term Goals: Develop a comprehensive brand management strategy, invest in employee training and development, and implement sustainable practices.
The success of Sedang Prestige Resort's revitalization strategy will depend on its ability to execute these recommendations effectively and adapt to the changing dynamics of the tourism industry.
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Case Description
North American and European branded hotel chains in their quest to maximize shareholder wealth have recently shed 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 promise of global quality. It is widely believed that Western brands deliver more value than brands from emerging nations, such that they can charge global prices to global customers. Service delivery failure is encountered frequently in the accommodation and food services industry. Such failures 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. They fear losing them as the cost of acquiring new customers may exceed the cost of keeping existing customers. The case illustrates how a globally branded North American hotel chain disregarded the basic tenets 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.
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