Khorntawatt  Sakhonkaruhatdej  Ph.D.  Business  Administration    

My  Dissertation  Topic  :  The  Strategy  for  Competitive  Advantage  Creation  of  Thai’s  Independent  Hotel  Business.  

 

 

 

 

 

 

 

 

 

Table  1    Definition  and  Examples  

Variable   Definition   Examples  D. V. 1 Firm’s

Performance

-­‐  Al-­‐  Manasra  et  al  (2013)  Considered  the  earliest  researchers  who  identified  entrepreneurship  as  a  strategy  to  create  

competitive  advantage.  Entrepreneurial  activity  will  result  in  positive  macroeconomic  outcomes  and  can  lead  to  improved performance in established organizations. -­‐  Firm’s performance could be defined in terms of a wide variety of organizational effectiveness criteria. A firm's economic performance is generally acknowledged to have two primary dimensions; growth and profitability. Al-­‐  Manasra  et  al  (2013) Mentioned several possible non-financial outcomes: increasing employee motivation and task involvement; keeping the firm's best and most talented people who might have left for lack of opportunities; and creating a positive culture that encourages the integration of employee and organizational needs.

PTT Public Company Limited,

TMB Bank Public Company Limited.

D. V. 2 (Mediator)

Competitive Advantage

- Is conceptualized as the implementation of a strategy that is currently not used by competing firms, which helps reduce costs, exploit market opportunities, and neutralize competitive threats (Leonidou and et al., 2013). - Advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. It is concerned with the interplay between the types of competitive advantage, i.e., cost and differentiation, and the scope of the firm’s activities (Broadly or narrow). Superior performance outcomes and superiority in production resources reflect competitive advantage (Singh, 2012). - Competitive advantage is the antecedent of increasing firm performance Low cost competition and

TMB Bank Public Company Limited.

product differentiation become valuable strategies for helping firms compete in the market (Ussahawanitchkit, 2012).

I.V. 1 Competitive Environment

- Hotel’s competitive environment affects the strategic planning performance relationship. External environment/ competitive environment can be described in terms of uncertainty, three environmental characteristics are included market turbulence that is the (1) rate of change of customers and their tastes. The more rapid the change, the greater the need for managers to change their product/service offerings accordingly. (2) Competitive intensity is the second environmental characteristic. Organizations operating as a monopoly, with no substitutes, have a strong hold over customers, as customers are simply stuck with the organization’s offerings. The third environmental characteristic, is (3) technological turbulence. Organizations that are at the forefront of technology may be able to keep ahead, by innovation, thereby abating, but not discharging, the importance f being customer orientated (Pillips,1999). - Competitive environment is defined as situations, circumstances and views of general (hotel) business operations in markets, including environmental heterogeneity, dynamism and uncertainty. It includes the perceived complexity of a firm’s environment; the perceived rates of change in the industry; and the perceived non – stability of its environment (Ussahawanitchkit, 2012). - Intensity of rivalry among competitors in one branch of industry, entry barriers, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and services (Dobrivojevic ,2013)

I.V. 2 Internal

Resource

- Leonidou et al. (2013) Resource-based view (RBV), which emphasizes the firm’s resources as key drivers of competitive and business performance. According to RBV theory, the firm’s control of valuable, rare, imperfectly imitable, and non-substitutable resources helps it design and implement strategies that will eventually create sustainable competitive advantages and achieve superior performance. The firm gains a competitive advantage by building strategies that exploit its own strengths and avoid its internal weaknesses, while responding to environmental opportunities and neutralizing external threats. - The founding base of RBV is given by Penrose (1959) describes a firm as a collection of resources and goes on arguing that it is the heterogeneity (differences) of the services available from resources that gives each firm its unique character. Penrose adopts a broad definition of resources to include managerial skills as well as entrepreneurial skills. Later on, Wernerfelt (1984) defines firm’s resources as tangible and intangible assets which are tied semi-permanently to the firm and posits that it is possible to develop a theory of competitive advantage based on the resources that a firm controls in accordance with the dualistic reasoning of economics (Brahma and Chakraborty, 2011). - The firm’s resource can be in the form of organizational innovation; Ussahawnichakit (2012) classified the organizational innovation as administrative innovation and technical innovation. Administrative innovation is refers to a new management system administrative process, and staff development program. It occurs in an administrative component and affects a social system of an organization via organizational members and their relationships, including rules, roles, procedures, and structures related to the communication and exchange between organizational members. Technical

innovation, defined as an adoption of new ideas pertaining to new products or services, and an introduction of new elements in an organization’s production process or service operations. It occurs in the operating component and affects the technical system of an organization through the equipment and methods of operations used to transform raw materials or information into products or services. It changes and applies new procedures and processes that initiate new products or services within the organization in the volatile markets and environments that influence the speed and flexibility of production and the quality of production. - Different business strategies require different IT strategies. Prospectors desire for flexibility and innovation in their IT strategy, defenders emphasize on cost containment and stability, and anlyzers endeavor to simultaneously achieve both (Li and Tan, 2013). - Leonidou, et al (2013) described internal resource as organizational resource and classified it into three constructs 1. Physical resources, 2. Financial resources, and 3. Experiential resources.

 

 

 

 

Table  2    Measurement  and  Results  

Variable   Measurement (Methodology)   Results  D.V. 1 Firm’s

Performance

- Variables were obtained from the survey. - Four- item scale was developed to evaluate firms that achieve the level and degree of performance, including efficiency, effectiveness, management satisfaction, and customer response and satisfaction (Ussahawanitchakit, 2012). - Business performance were measures by 1) employee productivity, 2) operation efficiency, 3) operation cost, 4) customer satisfaction, 5) relationship with partners, 6) revenue earnings, 7) profit, and 8) market share. This study measures all these items with seven-point Likert scales that compare the company to its key competitor, ranging form 1 (much worse than the competitors) to 7 (much better than the competitors). The authors place a survey package consisting of a cover letter stating the study objective, the survey instruction, and the survey questionnaire on a web server (Li and Tan, 2013). -­‐  Financial Performance can be measurement by 1. Sales growth, 2. Growth in profit after tax, 3. Return on assets, 4. Return on equity, 5.

- Beta between Competitive advantage and Firm’s Performance = 0.48*** or 48 % (Ussahawanitchakit, 2012)

Non- financial performance (alpha=.889)

Scale Factor loads

Mean SD

2)Customer satisfaction .783 3.67 1.197

Customer loyalty .787 3.64 1.157

Employee satisfaction .781 3.36 1.121

Employee turnover .628 3.23 1.175

1)Company image .771 3.72 1.216

Return on sales, 6. Overall firm performance and success (Koseoglu et al, 2013). - Non-financial performance can be measurement by 1. Customer satisfaction 2. Customer loyalty 3. Employee satisfaction 4. Employee turnover and 5. Company image (Koseoglu et al, 2013).            

Financial Performance (alpha= .779) (Koseoglu et al, 2013).

Scale Factor Loads

Mean SD

Sale Growth .670 3.56 1.098

Growth in profit after tax

.583 3.45 1.055

ROA .663 3.46 .912

ROE .586 3.43 .920

ROS .690 3.57 1.062

3)Coverall firm performance and success

.670 3.66 1.030

D.V. 2 (Mediator) Business

Competitive Advantage

- Four items were utilized to assess cost effectiveness, product quality, delivery dependability, new product development, and time to the market (Ussahawanitchakit, 2012). -­‐  Competitive advantage : cost leadership and differentiation (Koseoglu et al, 2013). Cost leadership: 1. Efficiency of securing raw materials or components. 2. Finding ways to reduce costs 3. Level of operating efficiency 4. Level of production capacity utilization. Differentiation: 1. Using new methods and technologies to create superior products 2. New product development 3. Rate of new product introduction to market 4. Number of new products offered to the market 5. Intensity of advertising and marketing 6. Developing and utilizing sales force 7. Building strong brand identification.

Scale Rank: **Mean (SD) - Cost leadership: 1 Level of operating

efficiency; Mean (SD) = 3.84 (1.131), 2. Finding ways to reduce costs; Mean (SD) = 3.73 (1.134), 3. Efficiency of securing raw materials or components; Mean (SD) = 3.73 (1.075).

- Differentiation: 1.Building strong brand identification; 3.81 (1.227), 2. New product development; 3.68 (1.094), 3.developing and utilizing sales force; 3.60 (1.169) (Koseoglu et al, 2013).

I.V. 1

Competitive Environment

- Variable were obtained from secondary data.

- The five forces model, which was developed by Michael Porter, is the most commonly used instrument for analysis and a very useful tool when examining the competitiveness of environment. Through Porter’s five forces, competitive environment is described by the intensity of rivalry among competitors in one branch of industry, entry barriers, bargaining power of buyers, bargaining power of supplier, threat of substitute products and services (Dobrivojevic, 2013).

Koseoglu et al, (2013) classified environment into three types; Market uncertainty (MU1.In our kind of business, customer’s product preferences change quite a bit over time, MU2. Our customers tend to look for new products all the time. MU3. Sometime our customers are very price-sensitive, but on other occasions, price is relatively unimportant. MU4. New customers tend to have product-related needs that are different from those of our existing customers. MU5. We cater to many of the same customers that we used to in the past, MU6. It is very difficult to predict any changes in this marketplace.

Technology uncertainty (TU1. The technology in our industry is changing

Scale Rank: **Mean (SD) Market uncertainty; (1) MU5. 3.75 (1.234), (2) MU1. 3.65 (1.226), and (3) MU4. 3.57 (1.160). Technology uncertainty; (1) TU2. 3.51 (1.174), (2) TU4. 3.43 (1.207), and (3) TU3. 3.28 (1.235) Competitive uncertainty; (1) CU2. 3.67 (1.259), (2) CU4. 3.64 (1.185), and (3) CU3. 73.62 (1.219)

rapidly, TU2. Technological changes provide big opportunities in our industry, TU3. It is very difficult to forecast where the technology in our industry will be in the next two to three years, TU4. A large number of new product ideas have been made possible through technological breakthroughs in our industry. TU5. Technological developments in our industry are frequent.

Competitive uncertainty (CU1. Competition in our industry is cutthroat, CU2. There are many ‘promotion wars’ in our industry, CU3. Anything that one competitor can offer, others can match readily, CU4. Price competition is a hallmark of our industry, CU5. One hears of a new competitive move almost every day, CU6. Our competitors are relatively weak.

I.V. 2

Internal Resource (Organizational Innovation)

- Variable were obtained from the survey. - Administrative innovation, four-item scale was developed to assess the degree to which firms promote work redesign and work systems, skills enhancement, management systems, and changes in incentives.   - Technical innovation, four-item scale was utilized to measure the degree to which firms change and apply new procedures and processes within the organization that influence the speed and flexibility of production and the quality of production (Ussahawanitchakit, 2012).  

Factor loading / Cronbach alpha Administrative innovation:  .83  -­‐  .89  /  0.82  Technical  innovation;    .91  -­‐  .95  /  0.84              **FL  must  >  0.40  /  Cronbach  must  >  0.70    

I.V. 4 Internal resource

(Physical resources)  

-­‐  Seven-point scale, adapted from Morgan et al. (2004) were used. - PHR1- Use modern technology and equipment - PHR2 – Have preferential access to valuable and environmentally friendly sources of supply. - PH3 – Have adequate service capacity availability (Leonidou et al, 2013).  

Items Item mean (SD)

Construct mean (SD)

PHR - 5.79 (1.06)

PHR1 5.68 (1.25) -

PHR2 5.71 (1.28) -

PHR3 5.96 (1.09) -

Table  3    Relationship  between  D.V.  and  I.V. D.V. 1

Business Performance D.V.2 (Mediator)

Competitive Advantage

D.V.2

(Mediator) Competitive advantage

*Significant at .05 level (Loseoglu et al., 2013) - For the mediating effects,  competitive advantage has

a potential positive interaction with firm performance (p14 = 0.47, p<0.01; b18 = 0.48, p<0.01). Competitive advantage is the outcome of firms’ successful strategy implementation (Ussahawanitchakit, 2012).

Financial / Non Financial Performance

Cost leadership .188* / .288*

Differentiation .412* / .464*

- Correlation

I.V. 1 Competitive Environment

Beta between competitive environment and competitive advantage were -0.18, mean the firms with stronger competitive environment will be weaker in competitive advantage (Ussahawanitchakit, 2012).

Competitive environment negatively moderates the firm performance relationships (b20 = -0.48, p < 0.01). Firms with stronger competitive environment will be weaker in firm’s performance (Ussahawanitchakit, 2012).

I.V. 2 Administrative

Innovation

No Direct Effect Administrative Innovation has a significant positive relationship with competitive advantage. (b1 = 0.46, p < 0.01; b6 = 0.50, p , 0.01) Ussahawanitchakit (2012).

I.V. 3 Technical innovation

No Direct Effect Technical innovation has an important positive association with competitive advantage (b2 = 0.41, p < 0.01; b7 = 0.54, p < 0.01), technical innovation becomes a critical driver of determining competitive advantage. Ussahawanitchakit (2012).

I.V. 4 Physical resources

No Direct Effect Correlation matrix.  (Leonidou et al, 2013) Variable Competitive advantage

Physical resources 0.34 n= 152; Correlations greater than l±0.16l are significant at the p< 0.05 level.

Market uncertainty

MU1.In our kind of business, customer’s product

preferences change quite a bit over time,

MU4. New customers tend to have product-

related needs that are different from those of our

existing customers.

MU5. We cater to many of the same customers

that we used to in the past, MU6. It is very difficult

to predict any changes in this marketplace.

Technology uncertainty

TU2. Technological changes provide big opportunities in our industry,

TU3. It is very difficult to forecast where the technology in our industry will be in the next two to three years,

TU4. A large number of new product ideas have been made possible through technological breakthroughs in our industry.  

Competitive uncertainty CU2. There are many ‘promotion wars’ in our industry, CU3.

Anything that one competitor can offer, others can match readily,

CU4. Price competition is a hallmark of our industry,  

Internal  Resources  

Organizational  Resources  

-­‐ Administrative  Innovation  -­‐ Technical  Innovation  

Physical  Resources  

- PHR1- Use modern technology and equipment - PHR2 – Have preferential access to valuable and environmentally friendly sources of supply. - PH3 – Have adequate service capacity availability  

Competitive  Advantage  

- Cost  Leadership;  1 Level of operating efficiency, 2. Finding ways to reduce costs, 3. Efficiency of securing raw materials or components.

-­‐  Differentiation;  1.Building

strong brand identification, 2.

New product development,

3.developing and utilizing sales

force  Hotel  Firm’  s  Performance  

1. Customer satisfaction

2. Company image  

3. Coverall firm performance and

success