Evaluating the value chain model for service organisational strategy : international hotels.
Strategic models like Porter's (1985) value chain have not been fully evaluated in the
strategy literature and applied to all industries. To theoretically redefine the value
chain technique, this research evaluates the value chain's use with various strategic
issues by applying it to a specific aspect in the service filed, namely the hotel industry.
The study defines five key questions by which to evaluate a strategic model and the
value chain model is examined using them. This research is a strategic theory-based
study involving in depth field work on five hotels in order to seek answers for the five
key strategic questions. In particular, the value chain of the hotel rooms divisions is
discussed based on the field research findings.
The research results show that the value chain technique is a useful strategic tool in
most areas and that it can be also developed for hotel strategy. However, some of the
commonly accepted issues about the value chain model have been challenged by this
research. To further the theoretical development of the value chain, these issues are
argued in each answer of the five strategic questions. Applying the value chain model
for hotel strategy seems to require somewhat different factors from applying it for
These are the key findings of this research. First, for strategic process, the hotel value
chain model can be developed in the combination approach which combines the
planning school and the incrementalism school. Second, the value chain is a very
useful tool analysing most strategic issues, especially a firm's internal analysis,
designing structure and performance measurement. Finally, unlike the traditional value
chain for manufacturing, this study identifies that the value chain technique for service
could be a more useful strategic tool for soft factors such as politics, culture and
leadership than hard factors such as cost and margin