Analyze Ginger Roots’ generic strategy and identify its main sources of competitive advantage. What do you consider to be the key resources and core capabilities that have made the ginger concept successful?
Ginger hotels are subsidiaries of The Indian Hotels Company Limited (IHCL). These hotels are based in India and have been in operation for more than six years. These hotels were established by Roots Corporation Limited (Kamplikar 1).
The generic strategy
The strategy is the course and range that a business entity expects to adhere to for a long period of time (Odoom 9). These strategies are expected to enable the company to realize its goals and accomplish the expectations of the stakeholders. Ginger concurrently applies low cost and differentiation strategies. This resulted in a hybrid strategy that contained two approaches (Odoom 35). Differentiation was realized by Ginger by offering unique services to its customers. The uniqueness in Ginger’s services was as a result of the use of the latest technology in most of its services (Kamplikar 7).
Main sources of competitive advantage
Ginger hotels came into existence as one of the greatest and innovative concepts of IHCL group. This hotel has a well-planned establishment chain of hotels that target the middle-class in the Indian market (Kamplikar 1). The hotel was designed to reach out to a larger percentage of the Indian population who could afford luxurious hospitality.
Ginger hotel is designed in such a way that it can target customers who are conscious of their expenses. These consumers prefer value to luxury (Odoom 12). Therefore, the prices offered by these hotels are a bit lower than those of the competitors.
Furthermore, Ginger hotel services were mostly self-service (Kamplikar 7). This approach was adopted to minimize the expenses so that they could manage to offer classic hospitality at a manageable and well-adjusted cost. Several self-service units are designed within these hotel chains. Some of them include the self check-kiosks that allowed customers to check into the hotels without the help of a receptionist. This greatly reduced pressure at the front desk and consequently lowered the operational costs of the hotels.
In addition, Ginger is the only hotel in India that operates without room service. Most of its operations are technology-based and therefore allowed customers to access services through computerized systems (Kamplikar 6). This was yet another cost-effective measure taken by IHCL when they started Ginger hotels. More so, The use of the latest technology in designing its security system ensures that its customers are safe. The use of a 24-hour surveillance system, swipe card door locks, and digital safes are some of the unique security features offered by Ginger at a subsidized price.
Ginger has a sophisticated reservation system that is composed of the normal basic reservation facilities and a comprehensive website. This website has access to the hotels’ special offers and a mobile application that offers instant room booking. This service is only available in Ginger hotels among the Indian middle-class level hotels. The levels of automatons in these processes give these hotels a class of their own. This is also a distinctive feature of Ginger hotel chains in India.
Key resources that have made the ginger concept successful
The costs of services offered at Ginger are relatively low compared to many hotels with the same status in India (Kamplikar 6). This is one of the major approaches that offer Ginger a competitive advantage over other hotels. The low costs are achieved through efficiency that is realized due to the use of technology and optimum use of the staff. The hotel applies a variable price rating in order to ensure that the controls on costs are effective.
The growth strategy of Ginger is defined by rigorous market development (Kamplikar 4). This is due to Ginger’s approach to new markets with its products and services. This was achieved through encroachment into new market segments, increasing the number of products and services used by their customers, and the creation of new customers (Odoom 38). The market size of Ginger is on the increase. Moreover, IHCL has a plan of establishing Ginger hotels in 80 cities across India (Kamplikar 4). This initiative aims at exploring markets outside India. Since its establishment, Ginger has opened up several chains in India. Most of these chains are based in upcoming cities, which are underexploited. Most of the current hotels are located near the leisure and business centres.
As a relative newcomer to India’s hotel sector, identify and evaluate Ginger’s principal strengths and weaknesses as depicted in the case. Analyze and evaluate Ginger’s Human resource and Marketing policies. Would you now recommend strategy/policy changes?
Ginger’s Principal Strengths
The type of business model adopted by Ginger hotels is unique. It is an innovative self-service model in the Budgeted hotel business (Renault par. 8). Some of its competitors, such as Lemon Tree and Red Fox, place themselves above the status of a pure budget hotel. This leaves Ginger as the only hotel in India that still sticks to the original model. It has managed to offer services offered by hotels higher than it in the rankings (Kamplikar 4). This has enabled it to establish itself in the market as a cost-effective but high-quality option.
Tata is a well-known business entity in the Indian market. Due to the fact that Ginger hotel is an affiliate of Tata, it offers an advantage over its competitors (Renault par. 9). Tate commands respect as well a large market share in the Indian business circles. Tata has been offering its customers high-quality services for many years. It has, therefore offered Ginger an image of reliability, quality, and real value in the Indian market (Kamplikar 1). Even if these other hotels decide to apply all the strategies adopted by Ginger, the reputation of the Tata brand gives it a different perspective on the market.
Ginger is also one of the major players in the hotel industry. Its presence is felt all over India (Kamplikar 7). It is the only economy hotel with branches all over India. It has a well-known reputation compared to other hotels of the same status. Its brand separates it from the other budget hotels. It has a strong presence in India. The locations of Ginger hotels are in the prime city areas that are accessible by both the business people and tourists. This makes it to be distinguished as a service provider for travellers and those who are seeking for affordable and high-quality services.
The qualities of services offered by ginger are standardized in all of its chains. This offers it an advantage as a customer can access same services in most parts of the country (Kamplikar 7). The Information technology department of Ginger hotels is also one of the best in the country. These services are also provided in all of its branches.
Ginger’s Principal Weaknesses
The growth of ginger hotels has stalled. This is due to inadequate innovations in the growth strategies of these hotel chains (Renault par. 10). Currently, Ginger owns 21 hotels in India. This number is supposed to increase to 80 within five years. The growth strategy of ‘build and operate’ has been tested by several businesses and proven to be very expensive. IHLC targets to achieve a high growth rate compared to the general growth of the hotel industry in India (Kamplikar 8).
This can only be achieved if the hotel chains increase in numbers aggressively. The application of a strategy of build then operate has slowed the hotel growth down. This is due to the longer times it takes to construct the hotel infrastructure.
The other weakness is the ever-increasing prices of products and services offered by these hotels. This negatively affects the hotels’ strategy of low pricing (Kamplikar 8). The increase in prices of commercial properties has forced the hotels to adopt a flexible pricing on their products and services. This has resulted into simultaneous increase in the prices. This may result into loss of customers especially if the prices exceed the worth of the products and services offered. Most of the techniques of service delivery applied by Ginger are tested and workable in various markets. This means that these techniques are easily accessible and can be adopted by competitors who may negatively affect the dominance of Ginger in the market.
In addition, Ginger faces several challenges in obtaining of qualified employees (Kamplikar 8). Its strategic locations in emerging markets make it difficult for Ginger to source well-trained and experienced staff. Another challenge is the complex technology applied by Ginger, which require experts to operate. Such experts cannot be sourced locally in the upcoming markets that Ginger targets.
Ginger’s Human resource and Marketing policies
The human resource and marketing strategies of ginger groups of hotels have been successful since inception. There are five major strategies. Ginger hotels are integrated with several low cost travel service providers (Kamplikar 5). This ensures that customers enjoy complete hospitality at the lowest costs possible. Another important aspect of Ginger hotels is location. They are strategically placed near railway stations that offer a cheap means of transport. Most of the cities that Ginger hotels are located are active in tourism and businesses (Kamplikar 5). Such strategic locations offer Ginger with a customer base to exploit.
Furthermore, the lean philosophy strategy seems to be working effectively with these groups of hotels (Nazemetz and Ruch par. 1). The staff is relatively small in number. Most of them are outsourced from cheaper labor markets. This helps the hotels to maintain low cost services. In addition, Ginger hotels provide all the basic amenities within their chains. Services such as gym, vending machines, ATMs, and self-service restaurants are provided by these hotels (Kamplikar 6). This helps them in managing the high standards. The brand that was chosen by the TATA Company while initiating Ginger is also appealing. It gives a feeling of freshness expected by the emerging middle-income earners in India.
The maximum duration needed for such a business to become profitable is approximately five years. Since it has been in the market for a long period, some of its strategies need to be re-examined to ensure sustainability and profitability.
To begin with, it is highly recommended that the hotel should focus on increasing the number of outsourced laborers. This will effectively lower the operational costs. The labor force should be efficient so that high quality standards are maintained.
In order to effectively manage expenses while maintaining high quality, Ginger hotels will have to reduce the operations of several internal business units. These operations should then be consolidated and standardized. Such a process will assist in attaining value at lower costs. Furthermore, the hotels should only concentrate on attaining the highest occupancy rates at the lowest administrative costs.
The increasing cost of prime properties is also an impediment towards the growth of the hotels (Kamplikar 2). Innovativeness in this field will enhance a sustained growth at affordable costs (Mandelker par.44). This will allow flexibility in the acquisition process. A contract model that allows revenue sharing can minimize the growth expenses. Ginger can also achieve high growth rate by acquiring and redeveloping existing structures. Renovation of already existing houses takes a shorter time than building new structures. This will minimize the time taken to start a hotel in a new place. In addition, the hotel can opt to subcontract some of its services. Services such as guest houses and conference rooms can be contracted externally to minimize the costs of developing structures for such services.
Furthermore, Ginger hotels can achieve expansion by launching its chains in shopping malls in cities that have limited numbers of hotels in the malls. This will ensure that the starts up costs are minimized since most of the services offered by the hotels are readily available in the malls.
In conclusion, the Indian market suffers from shortages of reliable guesthouses (Kamplikar 1). If these hotel chains decide to advance their growth rates through innovation and flexibility, they will have the capability of bridging the shortage. This will imply tripling the current revenues generated from the guesthouses.
Kamplikar, Mukta. Ginger: Smart Basics. Emerging Markets Case Studies 1(2011): 1-12. Print.
Mandelker, Daniel. Managing Space to Manage Growth. Web.
Nazemetz, Patricia and Will, Ruch. An Unlikely Partnership: When HR and Marketing Join Forces. 2012. Web.
Odoom, Clement. Logistics and Supply Chain Management in the Hotel Industry: Impact on Hotel Performance in Service Delivery. 2008. Web.
Renault, Val. SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats. 2013. Web.