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Harvard Case - China's Interlaken: Competitive Advantage through Cultural Replication

"China's Interlaken: Competitive Advantage through Cultural Replication" Harvard business case study is written by Ali Farhoomand, Minyi Huang. It deals with the challenges in the field of Strategy. The case study is 20 page(s) long and it was first published on : Feb 18, 2008

At Fern Fort University, we recommend that Interlaken implement a multi-pronged strategy focused on strategic partnerships, targeted market segmentation, and digital transformation to capitalize on the burgeoning Chinese tourism market. This approach will leverage Interlaken's existing core competencies in hospitality and tourism, while simultaneously adapting to the unique cultural preferences of Chinese travelers.

2. Background

The case study focuses on Interlaken, a Swiss resort town renowned for its natural beauty, seeking to attract more Chinese tourists. The town faces challenges in adapting to the specific needs and expectations of this rapidly growing market segment. The case highlights the cultural differences in travel preferences and the need for Interlaken to develop a competitive advantage through cultural replication.

The main protagonists are:

  • Interlaken Tourism: The local tourism organization responsible for marketing and promoting the town to international visitors.
  • Chinese Tourists: The target market segment with specific cultural preferences and travel habits.
  • Local Businesses: Hotels, restaurants, and other tourism-related businesses in Interlaken.

3. Analysis of the Case Study

SWOT Analysis:

  • Strengths:
    • Unique natural beauty and outdoor activities.
    • Strong reputation for quality and service in the hospitality sector.
    • Existing infrastructure for tourism.
  • Weaknesses:
    • Limited understanding of Chinese cultural preferences.
    • Lack of Chinese language support and cultural offerings.
    • Limited access to Chinese market channels.
  • Opportunities:
    • Rapidly growing Chinese outbound tourism market.
    • Increasing demand for authentic cultural experiences.
    • Potential for strategic partnerships with Chinese travel agencies and airlines.
  • Threats:
    • Competition from other destinations offering similar experiences.
    • Economic fluctuations in China impacting travel spending.
    • Potential cultural misunderstandings and misinterpretations.

Porter's Five Forces:

  • Threat of New Entrants: Moderate, as establishing a new resort town requires significant investment and time.
  • Bargaining Power of Buyers: High, as Chinese tourists have numerous alternative destinations to choose from.
  • Bargaining Power of Suppliers: Moderate, as Interlaken relies on local businesses for services, but can leverage its tourism infrastructure.
  • Threat of Substitutes: High, as other destinations offer similar natural beauty and outdoor activities.
  • Rivalry Among Existing Competitors: High, as Interlaken competes with other European destinations for Chinese tourists.

Value Chain Analysis:

Interlaken's value chain needs to be adapted to cater to Chinese tourists. This involves:

  • Inbound Logistics: Partnering with Chinese airlines and travel agencies to facilitate travel arrangements.
  • Operations: Providing Chinese language support, cultural offerings, and tailored services.
  • Outbound Logistics: Ensuring smooth departure processes and post-trip communication.
  • Marketing & Sales: Targeting Chinese market segments through digital marketing and social media.
  • Service: Offering exceptional customer service and addressing cultural nuances.

4. Recommendations

  1. Strategic Partnerships:

    • Establish strategic alliances with major Chinese travel agencies and airlines to leverage their market reach and expertise in attracting Chinese tourists.
    • Collaborate with Chinese online travel platforms to promote Interlaken as a destination and facilitate bookings.
    • Develop joint marketing campaigns targeting specific Chinese market segments.
  2. Targeted Market Segmentation:

    • Identify specific Chinese market segments based on age, income, travel preferences, and cultural interests.
    • Develop tailored marketing messages and offerings to cater to each segment's unique needs and expectations.
    • Offer Chinese language support in all aspects of the tourist experience, including signage, brochures, and staff communication.
  3. Digital Transformation:

    • Invest in a robust online presence with a dedicated Chinese-language website and social media accounts.
    • Develop digital marketing campaigns targeting Chinese tourists on popular social media platforms like WeChat and Weibo.
    • Utilize digital tools for booking, payment, and customer service to enhance convenience and efficiency.
  4. Cultural Replication:

    • Offer authentic cultural experiences that resonate with Chinese tourists, such as traditional Swiss cuisine, cultural performances, and workshops.
    • Integrate Chinese cultural elements into the tourism infrastructure, such as signage in Chinese and Chinese-themed decorations.
    • Train staff on Chinese cultural etiquette to ensure a welcoming and culturally sensitive experience for Chinese tourists.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  1. Core Competencies and Consistency with Mission: The recommendations leverage Interlaken's existing strengths in hospitality and tourism while adapting to the specific needs of the Chinese market.
  2. External Customers and Internal Clients: The recommendations prioritize the needs and expectations of Chinese tourists while ensuring the satisfaction of local businesses and stakeholders.
  3. Competitors: The recommendations aim to differentiate Interlaken from competing destinations by offering a unique and culturally relevant experience for Chinese tourists.
  4. Attractiveness: The recommendations are expected to increase tourist arrivals, revenue, and overall economic benefits for Interlaken.

6. Conclusion

By implementing these recommendations, Interlaken can successfully tap into the rapidly growing Chinese tourism market and achieve sustainable growth. The town's unique natural beauty, coupled with a strategic approach to cultural replication and digital transformation, will position Interlaken as a desirable destination for Chinese tourists seeking authentic experiences.

7. Discussion

Alternative strategies include:

  • Focusing solely on price competitiveness: This could attract price-sensitive tourists but might erode Interlaken's brand image and profitability.
  • Ignoring cultural differences: This could lead to cultural misunderstandings and dissatisfaction among Chinese tourists.

Key risks and assumptions include:

  • Economic fluctuations in China: A decline in Chinese economic growth could impact travel spending.
  • Competition from other destinations: Other destinations might offer similar experiences at lower prices.
  • Cultural sensitivity: Misinterpretations or cultural faux pas could damage Interlaken's reputation.

8. Next Steps

  1. Establish a dedicated team to oversee the implementation of the recommendations.
  2. Develop a detailed implementation plan with timelines, budget, and performance metrics.
  3. Engage with local businesses to ensure their participation and support for the strategy.
  4. Monitor progress regularly and make adjustments as needed to optimize results.

By taking these steps, Interlaken can successfully navigate the challenges of attracting Chinese tourists and achieve its goal of becoming a leading destination for this growing market segment.

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Case Description

Interlaken Village in Shenzhen, China, is an exact replica of the Swiss village of Interlaken, which is part of OCT East, a US$450 million investment in the thriving Pearl River Delta. This is a management strategy case for students to think outside the box about business strategies. In standard competitive strategy literature, firms should avoid being imitated or imitating others in order to gain unique competitive advantages. This case, however, examines whether copying can be a sustainable source of competitive advantage.

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