International Entry Strategy Of A Hilton Hotels

2671 words (11 pages) Essay

19th May 2017 Marketing Reference this

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This essay is discussing the entry strategy of Hilton Hotels Corporation and how it became a successful multinational company. However, before making a research based on the international entry strategy of a company, the understanding of the definitions of international strategy and multinational company is necessary, thus the two subjects are explained below. International strategy is when a company spreads out in the world beyond its local limits in search of locational and economic advantages. A multinational company is a group of organizations of different geographical locations and distinct aims including its centre of operations and the variety of national branches. This kind of network contains other groups like customers and suppliers which the multinational must cooperate with.

Hilton Hotels Corporation is a worldwide known company and one of the top ones that target the hospitality of the customers. The company develops, owns, and manages over 2,000 hotels, resorts and holiday properties. Hilton, Embassy Suites Hotels, Doubletree, Conrad, Hilton Garden Inn, Hampton Inn & Suites, Hilton Grand Vacations Company and Homewood Suites by Hilton, some of the best hotels around the world, are owned by this company. However, such greatness cannot be built up by its self and proper strategies are needed to reach such a level. Therefore this essay explains the strategies used from the Hilton Hotels Corporation to get the company as high as it is nowadays.

Hilton did not want just to adopt a strategy, but also transform it into action. He also wanted organize the daily strategic activities with the strategic objectives. These are the reasons he adopted the Balanced Scorecard methodology in 1997. Balanced Scorecard gave Hilton Hotels the ability to become an international hospitality leader after the results of greater profits, satisfaction rates and loyalty of customers. Moreover, the president of Hilton Hotels Corporation, Dieter Huckestein, came to the decision of adopting the Balanced Scorecard system as a tool all over the organisation. The Balanced Scorecard, the tool of performing a business strategy and providing higher profits, also provides a basis of higher performance to monitor the flow of the system. This lead in developing a web – based managerial solution of enterprise performance, instead of the three month spreadsheet – based report that has being used before, disabling previous problems.

After embracing the scorecard, Hilton established static spread sheet reports with metrics implied in red, yellow, and green colours. However, the properties were so many that was almost impossible to include the Balanced Scorecard system in spread sheets. For that reason, Hilton came to the conclusion that a complete performance management was needed. Therefore after putting into test some products of performance management and Balanced Scorecard, Hilton ended in choosing an application called Cor Vu Cor Strategy. The use of Cor Vu seemed to be surprisingly easy to customize when it came to the evaluation of the available packaged solutions. The combination of Cor Vu’s performance management and the knowledge of Hilton in hospitality, leaded to creating a powerful web-based enterprise performance management solution for hospitality. The company started to work with Cor Vu as a result of Hilton’s performance management enterprise. Working with Cor Vu to develop a Balanced Scorecard solution for the hospitality industry, the company was providing around the world online deliveries at any time, business intelligence to hotel management, vice presidents in the field of hospitality and managers in business offices.

Huckestein stated that the Balanced Scorecard was one of the most important parts of the business and the philosophy of functioning, giving to the company a lot of advantages. All the brands of Hilton Hotels Corporation embraced the Balanced Scorecard and members of the industry were motivated by staying focused on results to rise to a higher stage of performance. However, Balanced Scorecard had some disadvantages that needed improvement. Therefore, Huckestein stated that some improvements were made in the Balanced Scorecard. One of the improvements made was enhancing drill-down reports to give the operating department the ability to track individually its scorecard by allowing hotels to extract and aggregate relevant financials. Another improvement was enhancing customer loyalty data while comparing the performance of the company with the industry benchmarks and the competition.

The Hilton International, which has the responsibility of managing the brand and properties out of the United States, worked with Cor Vu to empower its Balanced Scorecard. Hilton International managers employ Cor Vu to track Customer Service Quality Performance, make a comparison with the performance ratings of other hotels and also share business expertise with other managers. The target of Hilton is remaining the favoured choice of the hotel industry by keeping track of the satisfaction level of the customers, mystery guest customer ratings and questionnaires answered by the supervisors. The Hilton’s Customer Service Performance data is acquired by the Cor Vu application directly from its Customer Satisfaction Tracking System.

Anthony Harris, chief executive of Hilton International, claimed that combining the operational expertise of Hilton and the Cor Vu solution leaded into developing a powerful hospitality scorecard application. A professor of Harvard Business School and one of the inventors of the Balanced Scorecard context, Dr. Robert Kaplan, stated that Hilton achieved a great amount of welfares by using the powerful application of the Balanced Scorecard methodology and that Hilton will become an international leader of the hospitality industry, by becoming partner of an outstanding solution software vendor. Dr. Robert Kaplan also stated that a successful Balanced Scorecard should include the strategy history of a company, like Hilton’s scorecard does and that Hilton can create a management system focused on strategy implementation.

Hilton, since the time that the Balanced Scorecard was enhanced, dramatically improved its internal customer loyalty and brand measures. In May 2000, Hilton was ranked as number one in customer satisfaction by the Michigan Business School and the American Society for Quality. In addition, the Balanced Scorecard rubric has helped Hilton to achieve the highest operating profit margins versus its competitors. To measure how competitive company is against other companies, Hilton continuously tracks a number of industry and competitor standards within Cor Strategy. Cor Strategy is also used in all kind of properties of other general or regional managers and hotel owners.

The basic components of Hilton Enterprise Performance Management system are the daily performance reports, the powerful intelligent effects of the business, the ability to connect directly to various data sources, the cooperative communication, the combined enterprise management and the cooperative figures about causes and effects. Moreover, the Cor Vu solution has already improved Hilton’s customer ratings, helped to achieve operational effectiveness, increase the loyalty level of customers, increase the income and the power of the Hilton brands. The system and the principal users, have the ability to hold management on its best performance. The principal users, who are over three thousand, are the president, executives with elder expertise, hotel managers and managers of other operations.

The leaders and designers of the Hilton Enterprise Performance Management system were executives with elder expertise at Hilton. Dieter Huckestein was an early titleholder of the Balanced Scorecard at Hilton, and the scorecard system was developed with the help of Cor Vu mentors. Scott Farr, Hilton’s Director of Performance Management, supervises the system management and updates. It is known to everyone that each user of a company have an important role in the management of the system, since their efforts are essential to the results of the performance.

Scott Farr stated that with such a big number of users, a simple, easy for using, practical solution had to be used and by choosing a web-based solution was very easy for the user requirements to be scaled. Therefore, once the company experimented with a variety of scorecard vendors, ended up by choosing to use the Cor Strategy and Cor Business. The reason the company used these applications was because they offered a full-inclusive creative performance management solution. Even though Cor Vu was experienced in the field of performance management, with low risk entry point and an extensible progress path, Cor Strategy offered a 100% web-based creative performance management solution with a combined strategy management, scorecard and accounting. Hilton soon had the ability to run its initial national project and then entered the international business. Presently, Hilton has more than 400 scorecards, more than 3000 operators and at more than 300 international locations. Scott Farr added that the company needed a performance management with high flexibility and customizable solution. Farr also stated that to control the performance-based operative compensation, local and enterprise scorecards were needed to gather data from distinct hotel scorecards. Thanks to the direct connection to a lot of data sources Cor Vu had, performance management data was gathered from a variety of systems on schedule. In addition, Cor Strategy was providing performance reports every day, scorecard presentations, and online performance cases to senior management, giving the company the information needed to make better business decisions. The scorecards were so energetic that gave the ability to study in bigger depth primary evaluations and reports. Seeing that Balanced Scorecard embraced the system with greater effectiveness, it was implanted in all Hilton hotels.

A big difficulty Hilton came head on with was disparate data. The overcoming of this difficulty by coordinating an effort to organise the data and regulating a method for data reliability was one of the biggest encounters. Thus the Balanced Scorecard became recognized as one of the most trusted and completed company wide information sources. Additionally, the organizing of scorecards for the Managed and Operations Department of Owned properties by the enterprise advanced into including scorecards for specific departments like ‘Sales & Diversity’ and other qualified properties. As soon as the initial structure was applied, almost anything that had been developed could be either copied or edited to build new situations. This led to saving plenty development time and regulating the development to make the direction much simpler.

Long distance plans was not part of the original strategy, because the system would have the disadvantage of untrustworthiness, but it was expected by the operators to be contained within the near future. Therefore, advantageously, Hilton’s operators can now access the scorecard through the web, where includes their business plan and other company applications. Moreover, Hilton is trying to create a stronger web base to provide further Balanced Scorecards and conference records to its users.

Scott Farr stated that the Balanced Scorecard program give to the members of the company the ability to expand their individual accountabilities. Additionally, Farr mentioned that the members of the company can keep track of their own individual performance online at any time through the web-based platform. Using this way, the members either being at work or at home, could clearly see the link between their personal lives and the condition of company.

The Hilton Enterprise Performance Management solution is organized on one Windows NT Server to support the system development and maintenance and the Hilton’s web site is held by a second Windows NT. In addition, the Internet can be used for the Balanced Scorecards and the Graphical Analysis data entree. All users can access Cor Vu via a browser to a significant web server using their given Hilton login passwords. Information is often updated and the users can access this information by using their own browsers. Users can fully access Hilton’s Balanced Scorecard system by just using a browser.

The Hilton Enterprise Performance Management solution assisted in regulating and integrating the information of Hilton Hotels, which led to opening some new reporting opportunities. In addition, as soon as the information was accessible, requests surged in, leading into creating new opportunities in the organization for further score carding and generating advanced business intelligence requirements. The solution made Hilton change the way he was cooperating with other vendors, giving the ability to change from the earlier manual trading to the automation of a lot of the vendors’ data and information analysis procedures.

To grasp the influence of the Balanced Scorecard in the company, various investigations took place. The investigations revealed that two years after the enhancement of Balanced Scorecard, the company developed in becoming stronger, more profitable and in making the customers more satisfied. The revenue index of Hilton Hotels had increased from 104% to 106%, the guest satisfaction had reached the rating of 6.25 out of 7 and the guest loyalty had increased from 48% to 53%. Furthermore, the customer retention rate had increased from 6% to 56% and Hilton had managed to get a 3% higher profit margin than the other full service hotels.

To track the process of the management strategy of a company, an environmental analysis is needed to be used. In this case, SWOT is identical for analysing the management strategy of Hilton Hotels. SWOT analysis emphasises on the Strengths, Weaknesses, Opportunities and Threats of a company. The strengths of Hilton Hotels are the good maintenance of the operatives and system, the technical advantage of improving the capabilities in customer services, the continuous upgrade of the business developments, the expertise in the hospitality industry gained through the years, the recognition as an astonishing brand and the respectable market reputation. The weaknesses of the company are the restricted market share and the operations that need to be reformed because of the various government policies. The opportunities of the company are the uniqueness in customer services, the ability of using improved technology and the large potential in evolving markets. The, the threats of Hilton Hotels are the competition with other hotel companies, the economic and political instability in many countries and the entry of new international brands.

The Hilton Hotels International Operations Centre is stationed in London and its International Offices are located in Singapore and Dubai. The aim of the company is ‘to be the first choice of the world’s travellers’, thus the Hilton Hotels can be found in Europe, Africa, United States of America., Middle East and Asia Pacific, providing to the customers around the world the services they need, satisfying them and gaining their loyalty. The Hilton Hotels, gained the expertise it has now in the hospitality industry through the years, by experimenting with strategies, methods and applications that was not familiar with at the beginning and choosing the finest ones to make the best out of the company. Hilton Hotels keeps adding resources, sharing and developing new models to empower its global growth. Currently, this company is so popular for its success that can be a paradigm to any other business all over the world.

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