We Are So Sorry: Sedang Prestige Resort
(9 pages of text)
Case (Gen Exp)
Looking back on the disastrous vacation of an American couple in Indonesia, this case shows how a globally branded North American hotel chain disregarded the basic tenets of maintaining their global brand promise, ignored generally accepted customer service standards, failed to instigate delivery failure recovery, and leveraged firm-specific capabilities to maximize shareholder wealth. The reaction of the local manager at the Indonesian hotel and adaptation of the value proposition are told from the perspective of the vacationing couple that experienced the diluted brand firsthand.
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. 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 high prices. Service delivery failure is encountered frequently in the accommodation and food services industry and such failures can act as important performance measurement criteria. This case teaches managers how to recover from service delivery failure and address loyalty issues of existing customers. They should fear losing customers as the cost of acquiring new ones may exceed the cost of keeping existing customers. This case seeks:
- To showcase internationalization challenges as experienced by foreign and local stakeholders.
- To illustrate strategic, operational, and marketing challenges faced by managers.
- To demonstrate why managers may make decisions and act counter to accepted business principles and theory and why this may seem attractive and deliver results in the short term.
Accommodation & Food Services
Indonesia, Medium, 2011
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