The hotel industry comprises one of Hong Kong's economic pillar
Dissertation submitted to in partial fulfilment of the requirements for the degree of Master of Business Administration.
CONTENTS
Acknowledgements
Executive Summary
1. Introduction
1.1 Background of the Study
The hotel industry comprises one of Hong Kong’s economic pillars so that with a vibrant market, competition is fierce. This supported the emergence of the concept of competitive intelligence as part of competitive strategy. The study evaluates the use of competitive intelligence in the Hong Kong hotel industry in the context of the heightened competition in the industry challenging hotels to invest and value information from their competitors to support competitive strategies. However, due to the sensitive nature of competitor information, the use of this competitive strategy also gave rise to the issue of ethical business practice.
Hong Kong’s hotel industry continues to experience fast growth. The industry remains profitable and progressive offering diverse opportunities for employees and varied services and features to customers. The actual and potential service provisions of the hotel industry are unlimited, which accounts for continuous improvements and innovations contributing to industry viability. ( 1998) Due to the profitability and viability of the industry, it has also evolved into one of the most competitive economic sectors ( & 2000).
Visitors to Hong Kong, comprising the market of the hotel industry, grew at a rate as high as 15 percent every year. Majority of visitors stayed overnight. Family visitors also increased visiting Hong Kong for tourism staying a few days. This means growth in demand for hospitality services and the need to develop competitive services and activities to draw customers. The increase in arrivals is mostly due to visitors from China as well as the Pacific Region, Europe, Middle East, and Africa for tourism or business because of the overall continuing economic growth in Hong Kong creating diverse opportunities for many industries. In addition, continues infrastructure developments in Hong Kong should actualise in the next 5 to 10 years, such as the redevelopment of the cruise terminal, further creating opportunities for expansion in the hotel industry. At the same time, this is making competition fiercer in anticipation of the entry of new players and the race to maintain top positions in the industry. ( 2008)
In response, there was also growth in the number of hotels. At present, there are already 145 hotels offering 52,569 rooms and there are 16 hotels expected to rise within the year. In addition, there are also 524 guesthouses offering 5,128 rooms. (Hong 2008) This means that the competitive atmosphere in the hospitality industry in Hong Kong is in part between hotels and guesthouses, with services differentiated by the nature of the services offered as well as price. Among hotels, the competition is also according to classification. The (2008) classifies hotels into classes, including High Tariff A Hotels, High Tariff B Hotels, Medium Tariff Hotels, and Non-response Hotels. There are 23 High Tariff A Hotels, 47 High Tariff B Hotels, 53 Medium Tariff Hotels, and 22 Non-response Hotels. Although the classification is in terms of tariff, this reflects the income of the hotels so that there are 23 hotels reporting high income that are likely to be large multinational hotels. In addition, the Hong Kong Tourism Board (2008) also classifies hotels into stars, with more stars implying better facilities and services, so that hotels with four and five stars are likely to be large and multinational hotels providing a range of luxury services. As such, fierce competition in the Hong Kong hospitality industry occurs in a number of dimensions encompassing size or scale of capitalisation, scope of market, and type and quality of service. Hotels need to identify their closest competitors and learn as much information on these competitors to determine their relative competitive position as well as develop strategies that would ensure competitive advantage.
Multinational hotels in Hong Kong are large hospitality firms competing based on type and quality of service. There are three established multinational hotels in Hong Kong, which are Shangri-La Hotels and Resorts, Mandarin Oriental Hotel, and The Peninsula Hotel. These three hotels have been operating in the Hong Kong hospitality industry for decades now and these have a number of hotel branches in other countries in Asia as well as in North America and Europe. As the three leading multinational hotels in Hong Kong, competition among these hotels is also fierce with one constantly seeking to achieve competitive advantage over the other in the quest to obtain the biggest market share of the luxury hotel market. As such, information on competitors is important for these multinational hotels.
Heightened competitiveness in the industry challenges hotels to draw out untapped capabilities and develop competencies to support sustainable competitiveness. At the firm level, top executives and managers face a number of challenges such as shifting its target consumer segments coinciding with changes in consumer demands, issues of liquidity, and intense failure percentage within the industry (. 1999). In addition, strategy determination shifted to becoming adept at anticipating the competitive moves of other players in the business in order to develop even better strategies. Fierce competition required hotels to learn how to anticipate and respond to the strategic moves of competitors. To survive, hospitality firms need to deal with all these multifaceted issues by understanding these problems and implementing appropriate strategies. Information then becomes a valuable tool in the competitive wars among multination hotels in Hong Kong. As such, competitive intelligence offers a number of benefits for these multination hotels.
Competitive intelligence refers to the coordinated and intentional monitoring of competitors in the specific marketplace. Competitors are the firms constituting rivals in an industry or sector competing for the same market segment or market share. In addition, competitive also pertains to the process of analysing and anticipating the future actions of competitors so that the firm can develop its business strategy to counteract the strategies of competitors. As such, competitive intelligence has two components. One is the collection of information on the strategic aspects of the operation of rivals. Another is the analysis of data to support calculated business decisions on competitive strategies. As a strategy, competitive intelligence is a form of silent warfare with the firm having the most effective intelligence capability winning the battle. (1996; 1999)
Competitive intelligence forms a vital role in business firms, particularly in the highly competitive industries. However, this is unrecognised by many firms and industries, including the hotel industry in Hong Kong or if it is applied, this is in a haphazard manner, giving rise to issues of ethical business practice. Since this competitive strategy is relatively new to different business firms, the difficulty could be in relation to the determination of the area of operation within which to assign intelligence work. Most assign this to product managers or the marketing department. However, competitive intelligence encompasses many areas of operation requiring the need to coordinate intelligence efforts in the different departments to ensure comprehensive data collection and analysis.
The process of collecting intelligence on competitors is akin to scouting in the army. Business firms need to develop discrete and creative means of deriving information on competitors regarding developments and plans. Otherwise, firms are unable to respond in a timely manner to the competitive activities of rivals and likely to lose out to their competitors in terms of market share and sales. There are a number of ways to collect information on rivals much like spying or intelligence work. Some would use non-employees to act as customers of their competitor and report an assessment of service and promotional activities of their rivals. Others would obtain information from disgruntled employees or former employees of competitors who switched to the company. Nevertheless, in the information age where every bit of information on strategies is valuable, ethical practice in business intelligence emerged. As such, business firms engaging in competitive advantage need to determine alternative ways of collecting information on competitors and identify whether these are acceptable before selecting a particular strategy.
Competitive intelligence encompasses a wide range of information collected in different ways. Different information serves different functions and time is an issue because of the impossibility of gathering all these information. It is also important for business firms to establish a clear definition of the desired information on particular competitors to match information needs. Generally, there are three uses of competitor intelligence. First is to achieve higher volume in sales relative to the competitor. This means focusing on the marketing schemes of rivals. Second is to identify the extent that the firm’s products compared with the products of rivals. This requires the collection of information on the product packaging and development in competitor companies. Third is to scout for potential firms to acquire or merge with to support horizontal or vertical integration strategies. This involves the collection of information on the financial prospects of the company. ( 2004) If business firms have not been able to clarify the purpose in utilising competitive intelligence, then it would have trouble in determining the appropriate intelligence technique.
As a process, competitive intelligence involves the derivation of three tiers of information. First covers facts on the area of business of a competitor or competitors to serve a particular purpose. This information usually supports comparisons of business aspects such as revenue generation, human resources, brand equity, and strategic partners. Second is analytical information derived from the comparison expressed through conclusions, implications and recommendations. Relatively poor sales of the competitor imply an opportunity for exploitation by the company. Third is predictive information that considers the facts and analysis to support educated and rational assumptions over the likely moves of the rival. Although, prediction amount to guesses, practice by regularly coming up with prediction and reviewing the accuracy of predictions based on actual moves by the competitor can develop into a valuable skills for the company. This skill translates to more accurate assumptions that support accurate strategic actions or counter-actions. ( 2004)
Utilising competitive intelligence involves a number of considerations to ensure success. One is the rationale of employing this strategy, which should revolve around the goal of achieving competitive advantage. Another is determining the specific purpose in collecting intelligence on competitors to match the means of gathering information. Last is the consideration of ethical business practice in selecting the mode of gathering information.
In the context of fierce competition among multination hotels and the potential benefits and issues of competitive intelligence as a tool for competitive advantage, the study seeks to gain in-depth knowledge on the competitive nature of the hotel industry, the extent that multinational hotels use competitive intelligence, the degree of effectiveness of utilising competitive intelligence, the benefits that hotels derive from the applying competitive intelligence, and the potential role and advantages that competitive intelligence offers to the hotel industry. One of the biggest challenges in the hotel industry, nonetheless, is the utilisation of unethical practices concerning, strategies, operations and tactics. Conducting competitive intelligence is an imperative action for multinational companies so that they can keep pace of the competition. By investigating how they conduct such, the research may be able to generalise the strategies that multinational hotels in Hong Kong prevalently implement and the overall effectiveness of these particular competitive intelligence strategies.
1.2 Research Questions
The key research questions to address are:
How competitive intelligence applies in the Hong Kong hotel industry?
How do multinational hotels make sense of their competitive intelligence?
How effective are competitive intelligence strategies utilised by multinational hotels in Hong Kong?
These key questions should support the derivation of in-depth information on the adoption, use and impact of competitive intelligence among multinational hotels in Hong Kong. The study also investigates answers to the following specific questions:
1) How do multinational hotels gather pertinent information on competitors?
2) How do multinational hotels evaluate and quantify the actual and potential competitiveness of their competitors?
3) How do multinational hotels use information in strategy development?
4) How do multinational hotels detect and combat changes in competitor’s competitive intelligence strategies (defensive intelligence)?
5) How does competitive intelligence support scenario planning and business decision-making?
1.3 Aim and Objectives
The study explores multinational hotel companies headquartered in Hong Kong specifically the adoption and utilisation of competitive intelligence, the reasons for this, and manner of utilisation. The aim of the study is to investigate the comparative competitive intelligence strategies that three multinational hotel giants in Hong Kong (Shangri-La Hotels and Resorts, Mandarin Oriental Hotel, and The Peninsula Hotel) implement and then derive benchmark practices for the hotel industry.
1.4 Significance of the Study
The study seeks to address the information or research gap in the utilisation of competitive intelligence in the hotel industry in Hong Kong. There are only a limited number of studies focusing on the utilisation of this competitive strategy in the hotel industry perhaps because of the limited uptake of hotels of this strategy or the non-consideration of this competitive strategy as a serious and formal competitive strategy of the firm. Many hotels already collect and use information on their competitors but not as a strategy, which means the non-optimisation of the benefits that individual firms can derive from integrating this technique into its overall competitive strategies. The study seeks to clarify the concept of competitive intelligence in the specific context of the Hong Kong hotel industry. In addition, the study also seeks to determine benchmarks or standards that could apply to the hotel industry as a whole based on the comparative experiences of three multinational corporations in Hong Kong. Doing so supports the important role that competitive intelligence can play individual hotels as well as provide standards in the utilisation of this strategy in the hotel industry.
1.5 Organisation of the Study
The presentation of results is through sections and sub-sections to support clarity of content and easy reading. The first section covers the introduction, which provides a background of the study particularly a first glance at the competitive atmosphere of the Hong Kong hotel industry, the multinational hotels, and the concept of competitive intelligence. This section also covers the research questions, aim and objectives, significance of the study, and organisation of the study. The second section is the literature review that contains a critical analysis of literature on the topic of competitive intelligence in Hong Kong’s multinational hotels by focusing on the concepts and results of previous related studies. The third section is on the methodology that details the research design and the specific data collection and analysis methods. This section also touches on the issues of validity, reliability and ethical research. The fourth section is on data analysis that contains a presentation of the data derived from the three multinational hotels considered in relation to literature and the implications to these individual business firms. The fifth section contains the conclusions derived the analysis of data in relation to the research questions. The sixth section provides recommendations on the content, focus of the study, and methods employed and suggest areas for future research. The seventh section contains the reflections of the researcher on the results as well as entire research process.
2. Literature Review
Accumulated literature on competitive intelligence focused on various areas including the concept or definition of competitive intelligence, the perspectives on competitive intelligence, the role and function of competitive intelligence, the strategic issues, and the comparative process. While literature provides a framework for the study, there is need to investigate competitive intelligence in the specific empirical context of the hotel industry because of the limited studies on competitive intelligence in the industry despite the apparent fit between the fiercely competitive industry and the competitive strategy of competitive intelligence.
2.1 Conceptualisation of Competitive Intelligence
A number of definitions of competitive intelligence emerged from the literature. These definitions focus on the different dimensions of competitive intelligence to support the consideration of these various dimensions in the study on competitive intelligence among Hong Kong’s multinational hotels.
and (1990) defined competitive intelligence as the aggregate of activities done by business firms to determine and understand the industry where they belong, identify and understand competitors, and determine and understand internal strengths and weaknesses, and anticipate the moves of its competitors and develop responsive moves. This paints competitive intelligence as a process comprised of a series of activities encompassing data collection and analysis to support assessment of competencies and strategic decision-making. This means that the current study investigating competitive intelligence in multinational hotels in Hong Kong should look into the activities done by these hotels in gathering information on competitors and using this to assess its internal competencies and develop effective responsive strategies.
and (1995) defined competitive intelligence as the bulk of information or knowledge derived by the firm used in formulating strategies needed in dealing with three entities, the competitors or rivals, the customers, and the regulators. This means that the measurement of the effectiveness of competitive intelligence is the extent that information derived supports systematic strategic planning. Accumulation of knowledge is important in having foreknowledge of present competitors and anticipating future competitors classified according to structure of ownership, gross financial indicators, relative competitive position, and present or future strategies. This definition focuses on competitive intelligence as knowledge used to support strategic decision-making so that the current study exploring the competitive intelligence of multinational hotels in Hong Kong should consider the nature and extent of knowledge of the hotels regarding their competitors and the manner of using knowledge to suit their strategies to the present and emerging contexts.
(1999) defines competitive intelligence according to the conceptualisation made by the that considered competitive intelligence as two-dimensional (See Figure 1 in Appendix) as comprised of systematic and ethical processes in collecting and analysing information regarding the activities of competitors as well as business trends to further the interests of the business. As such, competitive intelligence connects to other disciplines such as marketing, strategic planning, and product R&D. This definition also supports the current study on competitive intelligence in Hong Kong multinational hotels by adding other dimensions to the study, which are competitive intelligence as a strategic process. Competitive intelligence follows steps or phases to arrive at the intended outcomes and there are ethical issues that need consideration to ensure success. This definition introduced ethics into the process of competitive intelligence.
The three definitions focus on different dimensions of competitive intelligence, which are the activities of data collection and analysis, knowledge accumulated by firms on their competitors, systematic process of understanding competitors and competition, and actions giving rise to ethical issues. These are the dimensions for consideration in the current study.
(1999) conceptualised competitive intelligence as the same with business intelligence as product and process. As product, business intelligence is the bulk of knowledge obtained by a firm concerning its competitors from publicly accessible and private repositories of information providing a wide range of data on product development to marketing activities. As process, this involves the ethical and legal rules that firms utilise in collecting information to support business success in a competitive international environment. While the definition of business intelligence is the same as the definition of competitive intelligence, using one as a synonym for the other can create confusion. Business intelligence appears to have a general scope so that the information could be on anything related to the business but in using competitive intelligence, as the concept covering the derivation of information on competitors, there is greater level of clarity in the concept. In the current study, competitive intelligence is the concept used to reflect the focus on information and collection process supporting competitive strategies.
2.2 Perspectives on Competitive Intelligence
A number of studies approached competitive intelligence research by considering the various perspectives of this concept including the perspective of small and large companies, manufacturing and service industries, and managers and employees.
and (2001) found that many small businesses are yet to recognise the benefits offered by competitive intelligence. Information and the data collection process are only able to benefit firms when information is valued as a necessary ingredient of analytical exercises to support strategic decisions and plans. If small firms do not realise the value of information and its use in strategy determination, then competitive intelligence would not be able to provide its benefits.
and (2006) studied the perspective of small firms relative to large firms on competitive intelligence and found that small enterprises give moderate importance on competitive intelligence because this involves financial, human and time. The attitude of small enterprises toward competitive intelligence is also limited based on leader and follower status. For these small companies, competition is a highly aggressive action, requiring capitalisation that they do not have. The resources required in competitive intelligence that become a deciding factor for small enterprises when compared to large firms with the resources to invest in competitive strategies such as competitive intelligence. Different issues and factors regarding the adoption and utilisation of competitive intelligence emerge in the case of small and large firms resulting to differences in the extent of use of this competitive strategy and resources is one of the pressing factors for small firms.
These results support the focus of the current study on the multination hotels in Hong Kong since these are the firms likely to have adopted competitive intelligence by having the resources to invest in this competitive strategy. Apart from resource capabilities, competition among multination firms is likely to be fierce because of the high stakes involved that could result to significant successes or losses depending on the effectiveness of information and data collection in supporting strategy determination.
In addition, and (2006) also explained that small business firms also fail to focus on the various factors arising in the micro and macro business environment that encompasses the focus of competitive intelligence. This is the reason for the low uptake of competitive intelligence in the case of small business firms when compared to large firms. This means that multinational firms, which are also usually large firms, are likely to engage in competitive intelligence because these necessarily consider micro and macro factors emerging from the international business environment where these operate.
Notably, there are profound differences in the approach and treatment of information by small and large firms and therefore concurrent differences in competences and intelligences. Small firms are likely to consider subjective data based on experience, information means of collecting data, and ‘sense-making’ while large firms are likely to invest in formal ways of data collection. The strategic perceptions for multinational companies would include competitive intelligence as task-specific or actualised on a tactical strategic decision-making level.
Other studies focus on the perspectives of manufacturing and service industries on competitive intelligence. (2001) explained that competitive advantage applies to the manufacturing sector in planning the product life cycle. During the first stages of product introduction into the market, competitive intelligence supports the identification and monitoring of product uptake of consumers as well as the emergence of potential competitors. After identifying the potential competitors, strategic planning becomes necessary in developing and implementing the appropriate methods to address evolutions in the competitive environment. In the advanced growth and maturity stages, competitive intelligence becomes important in identifying and understanding competitive threats to support any necessary changes in product quality or quantity. Upon reaching the stage of decline, competitive intelligence works by drawing competitive information that could prolong product life and profitability to minimise market loss during the transition to this stage. At the end of the product life cycle, competitive intelligence has been able to derive comprehensive information on its competitors that is useful for application in future products and markets. Although, this covers manufacturing companies, competitive intelligence supports various areas of operations and stages of strategic implementation even in service firms, such as the multinational hotels subject of the study.
(2001) explained that in the service industry, competitive intelligence finds use in identifying and analysing competitive threats and opportunities to support the creation of value for consumers. In maximising shareholder value, the hospitality industry in particular employs customer-based competitive intelligence through understanding the needs and desires of customers as essential to building relationships. As such, the strategic function of competitive intelligence is to support competitive advantage of service firms rooted on customer satisfaction, service quality, and additional value. Service providers in the hospitality industry (i.e. hotels and restaurants) gather intelligence on a regular basis making competitive intelligence as vital to the success of the business. This study is one of the few researches that considered the role of competitive intelligence in the hospitality industry as part of the broader service industry. This supports the current study by establishing the role of competitive intelligence in the hospitality industry for further exploration in considering the specific context of multinational hotels.
These studies show the broad application of competitive intelligence, whether in the manufacturing or service industries but there is need to derive detailed information on the manner that actual firms adopt and use competitive intelligence to draw insight into the applicability of this concept given actual contexts of competitive environment.
The perspectives of top executives and top managers in relation to employees also emerged from the literature.
(1999) looked into the perspectives of CEOs and CIOs on competitive intelligence and found that top executives perceive this competitive strategy with importance. However, competitive intelligence does not receive sufficient investment during budget allocation. This means that even if competitive intelligence is important, it does not receive sufficient utility in actual strategic decision-making. As such, experiencing the benefits of competitive intelligence requires top executives to realise its importance and utilise this strategy in actual operations by allocating the necessary resources to support the development and integration of this strategic tool. This provides an important insight for further investigation in the current study. There is also need to consider the perspectives of the top executives towards this strategy to understand the extent of adoption and utility in the business firm.
(1997) considered the employee perspective by investigating the link between competitive intelligence and human resource management and found that human resource management policies developing the awareness of employees towards the value of information on competitors would facilitate the easier uptake of the strategy in the organisation. In addition, developing skills in collecting and analysing data would ensure the effective utilisation of information to come up with analysis supporting strategic decision at the management level. This means that in the current study on competitive intelligence in multinational hotels, the link between human resource management and competitive intelligence is important to determine the utilisation of the competitive strategy by the firm and the likely outcome.
(2001) considered a different approach and focused on the establishment of competitive intelligence departments in business firms as a reflection of the extent of adoption of the strategy into business operations. Results showed that some large companies have established in-house departments or outsourced this process to research firms. An issue that emerged is accountability of the staff in the department in relation to analytical outcomes based on the assumption that greater accountability for the outcomes of the department’s work translates into accurate analytical results that ensures effective strategic planning. The rationale for this is that personnel aware of their accountability are likely to focus on factors such as accuracy of information, comprehensive data collection, and sound analytical processes. This means that the establishment of competitive intelligence departments and the concurrent extent of accountability of personnel are areas reflecting on the utilisation and benefits of this strategy for investigation in the current study.
(2001) focused on the determination of the effectiveness of competitive intelligence programs, which the author found to rely on the training of analysts in charge of collecting and analysing information on competitors and the competitive environment. The author asserted that academics tend to excel in developing the critical, detail-oriented and creative thinking of people because they know the areas to focus on since they have not developed this skill themselves. As such, the training of analysts should go beyond academic training. To ensure long-term competitive intelligence, it should be difficult for people to become part of the training program and to successfully graduate from training. The rigorous selection and training program becomes necessary to ensure only people with potential to become effective analysts are trained for the job. Training process should also be rigorous to ensure that analysts have the necessary perspective, approach, skills, or competencies to handle and analyse information in a manner that match the information demanded by competitive strategy development and decision-making. In addition, the people supervising the training should also be top talents in competitive intelligence serving as part of the internal competitive intelligence department of the firm or hired from the outside. These are necessary to develop the competencies of mental flexibility, excellent intellect, and other qualities that support effective competitive intelligence. Competitive intelligence does not demand a degree but the production of results so that there is need to transform the academic approach into a future analyst perspective through apprenticeship programs.
2.3 Function of Competitive Intelligence in Business Firms
Diverse functions of competitive intelligence emerge in literature supporting the benefits that this strategy offers to different industries and various areas of operation of individual firms.
and (1993) explained that competitive intelligence supports business internationalisation. The global environment gives rise to the challenge for business firms to adopt new approaches in handling intelligence processes to be able to respond to the growing market, changing demands of international consumers, advancements in communication, rapid changes in economic and socio-political environments, and lowered barriers to participation in economies. In addition, many foreign competitors have entered the market resulting to greater competitive pressures for local firms. In these contexts, competitive intelligence supports the ability to identify opportunities for innovation and creativity as well as repositioning to enhance and maintain competitive advantage even with changes in the competitive players and environment. Business firms should adopt a culture supportive of intelligence to give way to the redesign of business processes and development of effective intelligence systems. and (1998) added that competitive intelligence serves the important purpose of facilitating the selection of strategic alliances in the global business environment that would support knowledge and technology sharing. Information of competitors and the competitive environment identifies the factors or competencies that the firm lacks and determines alliance partners that would provide the firm with what it lacks to achieve competitiveness. Business firms should adopt competitive intelligence to support internationalisation by facilitating the selection of strategic alliances.
and (2001) considered an internal perspective in explaining that competitive intelligence supports the change process in organisations. Integrating the process of competitive intelligence across the enterprise fosters organisational learning that provides the competency needed for an effective organisational change. This means that the greater the integration of competitive intelligence in businesses processes and culture, the higher the degree of organisational learning and the greater the support for organisational change. Business firms adopting competitive intelligence are likely to have the tools for change.
and (1996) focused on the role of competitive technical intelligence in commercial decision-making especially in firms establishing competitive advantage through technological capabilities. By gathering and utilising information on the technological position of competitors, a firm can assess its relative technological competence and identify areas for innovation to develop competitive advantage. and (1998) termed this process as technological forecasting. (1999) corroborated this by explaining that competitive intelligence supports competitive advantage when information on competitors undergoes strategic value analysis or the ranking and assessment of the relative capabilities of competitors. and (1997) also explained that competitive intelligence supports decision-making at the corporate level on matters such as diversification, downsizing, and strategic alliances that ensure that the firm is able to keep track of its advantages, disadvantages and opportunities for informed decision-making. Firms needing to improve corporate decision-making can benefit from engaging in competitive intelligence.
and (1992) linked competitive intelligence to human resource management by explaining that functional-level competitive intelligence means firms consider the management practices of its competitors or firms with similar characteristics to draw effective strategies and solutions. (1997) further investigated the relationship between human resource management and competitive intelligence and found that these constructs intersect with competitive intelligence comprising a solution to the barriers affecting the diagnosis of strategic information by organisation members. This gives rise to a dual impact. On one hand, competitive intelligence enhances the competencies of human resource. On the other hand, leveraging human resource management allows the successful integration of competitive intelligence into business processes. This means that investigating the extent that human resource management links to competitive intelligence in firms determines the extent of HRM benefits experienced by firms.
(1994) focused on the historical role of competitive advantage in marketing including the derivation of information on relative market share, market demand, relative competitive advantage, product positioning, branding strategy, and advertising techniques to support decisions and activities that are responsive to marketing weaknesses and opportunities.
(2001) further explored the strong link between marketing strategies and competitive intelligence and found that deriving and analysing information on competitors and the competitive advantage enables business firms to keep track of product life cycle allowing the implementation of activities to lengthen the growth and maturity stage prior to the inevitable decline of the product. As such, the extent that firms utilise competitive intelligence determines the accrual of benefits.
Strategic and Operational Issues
Competitive intelligence offers a number of benefits to business firms encompassing various areas. However, there are also strategic and operational issues that require consideration to ensure the successful acquisition and utilisation of competitive intelligence.
(1998) focused on competitive intelligence as a tool by discussing data mining as a means of handling information highlighting the issue of the consideration of data derived by the organisation in its daily operations, whether this forms part of the formal or informal process of information gathering. Data mining has three elements, mathematics by employing algorithms to support large bulks of information, database technologies for the storage of information, and advanced computer features to enable the storage of large bulks of information. Data mining benefits business firms by ensuring that these are able to handle large bulks of wide-ranging information on its competitors and the competitive environment that it collects everyday from different sources. As such, the utilisation of data mining by firms creates a system supporting competitive intelligence as a process. Data mining can make efficient the utilisation of competitive intelligence. Nevertheless, cost becomes the concurrent issue since data mining constitutes an area of investment requiring continuous maintenance. In addition, the ability of personnel to handle information derived on a daily basis using data mining is also an issue. If information derived daily is not handled property then this could lead to information loss or the failure to translate data into decisions and actions in a timely manner. Engaging in competitive intelligence is the first step since there is need integrate this process in the daily operations of the firm by using tools such as data mining.
and (2000) focused on the analysis of information through the process of profiling that requires knowledge on the part of firm employees. The analysis of information is as important as the handling or collation of information on a daily basis. The problem faced by firms is the adoption of the competitive intelligence process but without providing employees with guidance on the manner and tools of handling data. Profiling operates by identifying the individual or factor contributing largely to the advantage of competitors. This could constitute a guideline to the application of competitive intelligence at the front line level.
Prescott (2001) further investigated the issue of application of the competitive intelligence to consider this as a strategic issue and found that a key to successful implementation is to develop a culture driven by information by focusing on the individual by enhancing intelligence skills, human networking, and mechanisms facilitating information flow. (2001) further explained that the low level of effective application of competitive intelligence programs is lack of or limited skills training making it difficult to translate the process into action. (2002) focused on executives as individual decision-makers and stressed on the importance of tailoring intelligence to the needs of executive decision-makers. This means that for competitive intelligence to be utilised effectively the endeavour should focus on meeting the guideline needs of front line employees and tailoring of intelligence handling to the needs of executive decision-makers. However,. (1999) explained that executives should also allocate resource support to competitive intelligence if they want results tailored to their needs and people with the skills to handle data. This means that the successful acquisition and utilisation of competitive intelligence requires expenditures together with knowledge and skills development.
(2001) explored the establishment of departments solely handling competitive intelligence and the issue of accountability in these departments. Large and global organisations are fit to establish a separate department to gain benefit from specialisation. A means of addressing the issue of accountability of the department is through the utilisation of measurement models that determine effectiveness and point to the existence of any gap and the factors causing the gap between the expected and actual results. This means that the effective utilisation of competitive strategy can be made through the establishment of a departments focusing on intelligence if appropriate or within the capability of the company as well as ensure accountability of the team through measures of effectiveness to ensure that the department focuses on accurate data handling.
3. Methodology
The goal of the study is to explore the acquisition and utilisation of competitive intelligence in the three largest multinational hotels in Hong Kong. The research onion model ( & 2003), as shown in the Appendix, comprises the methodological framework of the research. The research onion provides the various considerations in the development of the research methodology from general to the specific considerations.
3.1 Research Philosophy
The study utilised the objective approach, which posits that “social entities exist in a reality external to social actions” (& 2003,). This applies to the study because the target of the research is the processes, structures and systems comprising or interacting with competitive intelligence within which personnel operates. In addition, the researcher does not belong to the business firm subject of the study, the researcher sought to derive accurate and comprehensive information on the acquisition and utilisation of competitive intelligence in the three top hotels in Hong Kong from an outside looking in perspective. The outsider status of the researcher supports the objectivity of the data collection instrument and the interpretation of data. Objectivity, as applied in the study, is the fact-based approach (& 1997) maintained by using a well-developed and valid measurement or analytical instrument for all respondents and the answers they have given.
3.2 Research Approach
The research employed the inductive approach because the research involves the collection of specific data for analysis. From the specific data, conclusions and generalisations on the acquisition and utilisation of competitive intelligence by the three top multinational hotels in Hong Kong were determined. The inductive approach applied to the study because the study collects specific data and analyses the data to come up with general statements on the implications of the data relative to the competitive context of the hotels from which primary data comes from.
3.3 Research Strategy
This study used case study method as strategy. Case study is defined by (1984) as “an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evidence; and in which multiple sources of evidence are used” This definition provides a number of implications. First is the application of the case study method in empirical studies such as the current study that considers the acquisition and utilisation of competitive intelligence by the three top Hotels in Hong Kong. Second is the application of the case study in situations when the distinction between phenomenon and context is not clear. In this study, previous empirical studies have looked into the various concepts encompassed by competitive intelligence. However, there are limited studies on competitive intelligence in multinational hotels requiring detailed results to support sound conclusions. Third is the use of the case study method to draw details from multiple sources of information. The study considered three cases constituting multiple sources of rich data.
The case study method applies to the current research because the objective is to come up with detailed and context-based analysis of particular situations or events. Although the case study method has been criticised for its failure to provide limited grounds for the reliability and generality of findings, this method has also contributed significant details to knowledge on particular issues. By using the case study method in data collection, the research was able to derive detailed information able to support conclusions on the acquisition and utilisation of competitive intelligence by the three top multination hotels in Hong Kong. Since data was derived from representatives of the three hotels, data may be considered as valid in expressing the empirical foundation of the conclusions and generalisations.
3.4 Research Method
There are two research approaches, qualitative and quantitative. Each coincides with a research purpose, data requirements, data collection method, and data analysis. Although there are overlaps between the two approaches, these are distinguishable for purposes of determining the appropriate research approach. Based on the distinctions, the study applied the qualitative approach.
The qualitative approach pertains to a method applicable to studies intended to come up with detailed and comprehensive accounts or descriptions of cases, relationships and situations (& 2006). This approach supports the determination of a wide range of data encompassing the immeasurable aspect of the research such as opinions or perceptions. Moreover, the qualitative approach works well in studies seeking answers to particular issues including the identification of problems and determination of the scope of issues, understanding situations, and interpretation of the meaning of a phenomenon. In addition, this approach is appropriate in studies focusing in-depth on implications and impacts by investigating the causes, reasons, and justifications for a phenomenon. ( 2002) These features of the qualitative approach support conclusions as well as generalisations on best practices or recommendations for future action.
The quantitative approach applies deduction in forming and testing concepts or theories over a particular phenomenon. This approach usually involves the identification of theories, hypotheses for testing, and statistical methods used in testing. ( & 1998) In addition, this approach also supports the collection and analysis of measurable data ( 2003). This approach works best in researchers seeking to test theories in empirical situations or derive an understanding of situations through measures or statistical results.
Based on the conceptualisation or definition of the two approaches, the appropriate method for the study is the qualitative method because the investigation seeks to derive in-depth data and explore the acquisition and utilisation of competitive intelligence in three multinational hotels in Hong Kong.
In addition, the distinction of the qualitative and quantitative approach also justifies the use of the qualitative approach.
First distinction of the qualitative and quantitative approach is the aim or purpose appropriate to the method. The purpose of the qualitative approach is to derive a comprehensive and detailed description of the phenomenon or situation subject to investigation while the purpose of the quantitative approach is to classify and measure variables as well as develop a statistical model to explain data (2003). The present study aims to come up with an in-depth exploration of the acquisition and utilisation of competitive intelligence in the three largest multinational hotels in Hong Kong. This purpose fits the qualitative approach’s thrust towards in-depth data from accounts or descriptions. The aim of the study does not involve the testing of theories or derivation of measurable data making the quantitative approach unsuitable or inappropriate for the study.
Second distinction is the extent of expectation of outcomes. In the qualitative approach, the researcher can roughly expect certain outcomes but not the entirety of outcomes while in the quantitative approach, the research knows the intended outcome and proceeds to conduct tests to determine whether the outcome is one or the other ( 2003). In the current study, the researcher has a certain degree of knowledge of competitive intelligence based on literature. However, there is still need to know how this concept operates in multinational hotels.
Third distinction is the perspective of the research in the collection of data. In qualitative approach, the perspective of the research is subjective because of the importance of individual interpretation of the phenomenon covered by the study. This is necessary to have an in-depth investigation. In quantitative approach, the perspective of the research is objective because of the aim of deriving precise measurements and analysis of theories and quantifiable data. As such, there is no need for individual accounts of the study. ( 2003) This distinction points to the appropriateness of the qualitative approach to the study on competitive intelligence because no theory testing or derivation of measurable data is involved in the research process.
Fourth distinction related to the previous one is the role of the researcher in the data collection process. In qualitative approach, the researcher himself is the instrument in the collection of data by being part of the data gathering process that could involve interaction with key respondents while in quantitative approach the researcher employs tools to derive numerical data, which means that there could be no interaction or only limited interaction with the respondents. There is a tendency for the researcher applying the qualitative approach to become immersed in the research process and contribute insights into the data collection process and analysis while in the quantitative approach, the researcher tends to become more detached from the subject of the research investigation. This implies the emergence of the issue of bias differently in the two distinct approaches requiring differentiated responses. ( 2003) Based on this distinction, the qualitative approach applied to the study because of the participation of the researcher in the data collection process necessitating interaction with the primary source of data.
Fifth distinction is the data collection instrument. In qualitative approach, the data collection process includes observation, interview, focus group, document study, and case study involving non-measurable data while in quantitative approach, the data collection methods include survey, experiment, and other methods targeting measurable data (2003). Since the study used interview as the data collection method, then the appropriate approach is qualitative research.
Sixth distinction is the form of data. As previously mentioned, the qualitative approach results to data presented in words, pictures and objects while in quantitative approach the data comes in the form of numbers and statistical results (2003). In the study, the data derived is presented in the form of words or texts and not in the form of numbers making qualitative approach the appropriate method.
Seventh distinction is the limits of the research process. Qualitative approach involves richer data, more time involved, and moderate opportunities for generalisations depending on the purpose of the study and cases involved. Quantitative approach works more efficiently in testing hypothesis but have limitations in deriving contextual detail. (2003) The data collection process of the study consumed time in completing the interview process, transcribing the results, and analysis of the answers to the questionnaire. The study also sought to arrive at generalisations for multinational hotels or even the hotel industry in general.
3.5 Time Horizon
3.6 Data Collection Strategy
3.6.1 Data Requirement
3.6.2 Data Collection
3.7 Data Analysis
3.8 Issues
4. Data Analysis (15)
5. Conclusions (8)
6. Recommendations (1)
7. Reflections (1)
Appendices
Figure 1: Overview of Competitive Intelligence Process
Figure 2: Research Onion Model
Source: ( & 2003)
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