Response strategies of traditional firms indisruptive times. : A case study on sustainable strategies of the hotel industry in response tothe sharing economy evolution.

University essay from Linnéuniversitetet/Institutionen för marknadsföring (MF); Linnéuniversitetet/Institutionen för marknadsföring (MF)

Abstract: Purpose - Traditional firms within mature markets are challenged, as they have to rely a lot on adaptation of new technologies in order to keep their service sales among consumers and survive in a highly competitive globalized environment. One of the examples of a mature industry is the hotel industry, in which sustainability is a vital necessity, however implementation efforts are slow. Nowadays, a business shift is occurring from traditional to disruptive innovation models. One such model is that of the sharing economy. The aim of this thesis therefore targets the finding of the understanding and reaction, by analyzing and describing actions, of traditional hotel firms for sustaining their business in times when sharing economy firms become increasingly influential on the traditional business. Design/methodology/approach - An abductive approach was followed throughout the thesis spanning a qualitative data analysis of the empirical base of the study, which consisted of six semi- structured interviews of traditional hotel firms that were chosen through theoretical sampling. The multiple and holistic case study setup is a means of explaining response strategies in the hotel industry. Findings - The findings are that while some are aware of the growing impact of sharing economy on the mature industry, few firms have concrete strategies to sustain their own business in the light of the upcoming challenges. Moreover, the interviewed firms have lost large percentages of their traditional direct sales channels, making it essential to sell increasingly through online channels and third party providers such as online travel agencies. This adds to the challenge that the service offerings of sharing economy firms and established firms are becoming more comparable to each other, making it easier for the customer to compare directly which choice is preferable. The empirical data suggests that this is of relevance for both the leisure and business segment of travelers. However, there were also positive effects found, that the sharing economy is an opportunity for traditional firms to learn and for travel destinations to be boosted through increased supply and variety. Research limitations/implications - The chosen case study setup is a means of explaining responses from the hotel industry due to the sharing economy. However, there is an indication that a similar phenomenon can occur in a different mature industry, such as the taxi industry with Uber or the financial industry with Bitcoin. Moreover, this case had hotel firms operating on a 3-star level or higher, which imposes potential limitations for the applicability. However, for the research implications this thesis includes a model that contains theoretical description of a practical phenomenon within a shifting context. Practical implications - Traditional businesses must find new ways to highlight their unique values, core competences and what most significantly distinguishes their offering, for example beyond being an accommodation provider, in order to develop a sustainable business that can withstand the challenges in the 21st century. It is recommended for firms to assess their position in the market, their customers and competitors to decide on which strategy is best suited, as it may vary with every firm. Analogous, it is not recommended to rest on previous successes. Originality/value - Increasing influence of the sharing economy forces traditional firms to respond with their own strategic countermeasures. However, the response of traditional firms to the impact of sharing economy firms is not well described and has empirically been insufficient. In this way, the thesis contributes to the existing research on the sharing economy and its impact by studying the consequences for and responses of firms in a mature industry. Therefore, it addressed challenges in theory all well as in practice for the affected businesses. The finding and combination of response strategies in this thesis presents a valuable contribution to academia and practical implications for the mature industries.

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