Value chain and the Internet in companies pursuing a differentiation strategy: case studies of Finnish hotels

Abstract: The Internet together with information technology sets new challenges, but
also opens opportunities for companies to achieve competitive advantage.
Therefore, the research problem of this thesis has been formulated as how
can the value chain be described in a company pursuing a differentiation
strategy under the influence of the Internet. The research problem is
further developed into two research questions concerning how value chain
and sources of differentiation can be described under the influence of
Internet technology.

The purpose of this study has not been to generalize findings to all
Finnish hotels, but to gain a deeper understanding of value chain and
Internet technology in companies pursuing differentiation strategy. A
qualitative research approach is used for this study. Two Finnish hotels
have been chosen as our case study companies, and within these case
companies, one small congress hotel and one national wide hotel chain have
been selected. Personal interviews were conducted with the persons,
possessing the best knowledge in developing company’s strategy.

The findings of this study clearly indicate that the way the Internet has
affected on the case hotels’ value chain is unique and depends on many
factors, like the scope, size and scale of business. The hotels have taken
advantage of the potential of the Internet technology as an information
centre, reservation medium, and operational tool. The information
technology is permeating the case hotels’ value chains practically at almost
every activity, but still, the Internet technology is not applied by the
hotels enough to exploit the full potential. In addition, the Internet
technology has not been utilized by the hotels as the dominant source of
differentiation for each activity within value chain. The hotels have used
Internet technology neither to establish distinctive strategic positioning
nor to reflect hotels’ differentiation strategy. The most significant
implications from this study can be indicated as the importance of the
integration and the fit of the companies’ over all competitive strategy and
the value chain activities. When it comes to Internet technology, the
companies should strategically make choice on the best suitable
technological applications and creatively deliver values to fit and
strengthen companies’ competitive strategy.