{"id":2035,"date":"2024-07-22T09:39:20","date_gmt":"2024-07-22T09:39:20","guid":{"rendered":"https:\/\/britainwriters.com\/answers\/?p=2035"},"modified":"2024-07-22T09:39:22","modified_gmt":"2024-07-22T09:39:22","slug":"lead-strategic-transformation-assignment","status":"publish","type":"post","link":"https:\/\/britainwriters.com\/answers\/lead-strategic-transformation-assignment\/","title":{"rendered":"Lead Strategic Transformation Assignment"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><strong>Assignment Task<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Case Study: Prune the Brand Portfolio?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Introduction<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The business-casual dress code had Troy Freeman stumped. As the long-time CEO of Otto Hotels &amp; Resorts, now the second-largest lodging company in the world, he\u2019d packed for hundreds of work trips before, but without suits as an option, he was having a much harder time. His flight was leaving first thing in the morning for Carmel, where he would meet his newly expanded executive team for an off-site to discuss the company\u2019s portfolio strategy. The facilitator, Caroline Dvorjak, was a marketing professor and a seasoned consultant. Otto had just finished a $9 billion acquisition of Beekman Hotels, which meant it now had nearly 4,800 hotels and slightly more than a million rooms in 100 countries 1. Like most of the big hoteliers, however, Otto owned few of those properties; instead it franchised and managed them, with the bulk of the real estate owned by independent companies that licensed Otto\u2019s brands. The addition of Beekman\u2019s eight brands had increased the number now under Otto\u2019s umbrella to 21. The question on everyone\u2019s mind, especially investors\u2019, was how Troy would manage this much larger portfolio2, given the overlap between existing and acquired brands in terms of positioning, price tier, and geography<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>A Bigger Bucket<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As soon as Troy passed through security the next morning, he saw Kent and Khalil in the line at Starbucks. He hadn\u2019t realized they were on his flight but was pleasantly surprised. They waved him over, and Khalil pointed to his phone. \u201cDid you do your homework?\u201d he said, teasing. \u201cWe didn\u2019t get your statement.\u201d \u201cI think we have enough opinions to go around,\u201d Troy replied, \u201cso I\u2019m still Switzerland\u2014at least for now.\u201d Khalil and Kent had been close allies ever since Khalil\u2019s ascension to the top of Piper, five years earlier. When Caroline had mentioned wanting to avoid politicking, Troy had immediately thought of these two. They\u2019d always seen the acquisition as a way to grow Otto\u2019s existing brands. \u201cI guess you know where we all stand anyway,\u201d Kent said. \u201cMeena wants to save costs. Rick and the other Beekman folks want to save their brands.\u201d He was referring to Rick Guerrero, the manager for Evenstar, Beekman\u2019s largest chain, which had the most overlap with Piper and was therefore a target for absorption. Rick had indeed defended his brand but also said he would be willing to take a step down and work for Khalil and&nbsp;Piper 5&nbsp;if that\u2019s what it came to.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cBut,\u201d Kent continued, \u201cMeena\u2019s Four Seasons analogy doesn\u2019t really hold water. Regent played in the same price tier but in entirely different geographies. The situation wasn\u2019t nearly as complex as ours. And it did rebrand as Four Seasons over time.\u201d Khalil jumped in. \u201cFor me, it\u2019s really a resource question. Right now we\u2019re putting our resources into 21 different buckets. What if we put them into just 15\u2014or 10? We\u2019d be able to do a lot more with the successful brands.\u201d&nbsp; \u201cOr do you just want a bigger&nbsp;bucket?\u201d 6&nbsp;Troy asked, smiling.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cYes, of course I do. But I swear this isn\u2019t just about Piper. It\u2019s about all of Otto. If you look at how most of Beekman\u2019s brands are doing, it isn\u2019t pretty. If we bring them in as is, they\u2019ll dilute the portfolio. It\u2019s time to put them out of their misery.\u201d \u201cAnd give you their properties?\u201d Troy asked. He was getting annoyed. Otto wouldn\u2019t have acquired Beekman to get a collection of sorry, underperforming brands. \u201cYes, exactly! Or we can sell Beekman\u2019s weaker brands and use the money to support the stronger ones.\u201d \u201cThat\u2019s possible,\u201d said Troy, trying to keep his voice measured, \u201cbut what if the new owners compete with us and steal market share?\u201d Kent seemed to sense Troy\u2019s irritation and piped up: \u201cI don\u2019t think either of us would argue that we should get rid of all Beekman\u2019s brands, right?\u201d Khalil nodded. \u201cThey have some good flags&nbsp;7<strong>.<\/strong>&nbsp;It\u2019s just too difficult to manage that many. \u2018Swim lanes\u2019 might make sense from a financial standpoint but not in the eyes of our customers. Our research shows that most people don\u2019t distinguish between brands. Piper or Evenstar\u2014it\u2019s all the same to them.\u201d&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cOK,\u201d Troy said, \u201clet\u2019s wrap up the lobbying efforts for now. We can debate this with the group later. I\u2019m going to get a coffee and read the Journal.\u201d Khalil clearly had more to say, but he took the hint.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In Carmel<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The seats people chose at the conference table reflected where they stood on the portfolio issue. The Beekman managers were all on one side. They had a personal stake in the decision, of course\u2014they wanted to keep their jobs\u2014but they\u2019d also made good business cases against pruning, arguing that it would cut off consequential income streams. Meena sat with them, right next to Rick. On the other side were Kent, Khalil, other managers from Otto, and Anita Dineen, its COO, who supported streamlining to simplify her team\u2019s job. Caroline kicked off the meeting by asking people to summarize some of their main points while she wrote keywords on a whiteboard. \u201cWe need a brand architecture that isn\u2019t confusing to customers, hotel owners, or even our own employees,\u201d said Anita. \u201cWhat we\u2019ve got is a mess.\u201d \u201cWhat we\u2019ve got is scale, which is exactly what we wanted from this deal,\u201d Meena responded. \u201cBut I\u2019m glad you brought up owners. We haven\u2019t yet talked about the impact on them.\u201d Rick and his colleagues nodded, and Caroline encouraged her to elaborate. \u201cThere are only so many places we can open another Piper,\u201d Meena said. In some cases, Otto had given owners of Piper hotels exclusive rights to certain markets, and those contracts prevented it from flying another Piper flag in those areas. Rick spoke up. \u201cYes, we\u2019ve heard from lots of nervous owners. If we discontinue the Evenstar<strong>&nbsp;<\/strong>brand&nbsp;8, they might discontinue their affiliation with us and defect to Hilton, or another competitor. We will lose properties.\u201d&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The room was quiet for a moment. Everyone knew this was a sore point for Troy and the board. The reason for buying Beekman was to scale quickly, and losing hotels would defeat that purpose. Otto needed to retain as many properties as possible. \u201cI think owners will be clamoring to stay,\u201d Kent countered. \u201cThey\u2019ll save on procurement, reservations, and agency fees and, ultimately, have greater pricing power, because we control much of the room inventory in their markets.\u201d \u201cThose are the upsides we\u2019ve touted, but we haven\u2019t realized them yet,\u201d Meena said. \u201cIt\u2019s early,\u201d Troy said. \u201cOK then, let\u2019s talk about the stock price,\u201d she continued. \u201cThe latest research shows that in most situations, portfolio slimming hurts value.\u201d \u201cBut investors have responded incredibly well to the purchase,\u201d Kent said. Indeed, the sector was up 80% since the close of the deal, with Otto leading the way. \u201cThey\u2019re clearly not concerned about consolidation.\u201d \u201cRight,\u201d Khalil added. \u201cBesides, those are consumer packaged goods studies\u2014totally different scenarios.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cI wouldn\u2019t say it\u2019s irrelevant, though,\u201d Caroline said, stepping into the fray. \u201cWe should learn from other&nbsp;industries&nbsp;9. That said, there\u2019s evidence to support both sides here: cases indicating that it\u2019s a huge mistake to eliminate brands worth millions of dollars and ones showing that when you try to run a portfolio as big and overlapping as yours, it inevitably leads to failure. The research won\u2019t make the decision for you.\u201d&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cI guess we knew that,\u201d Troy said. \u201cOne thing the research shows for sure, though, is that it\u2019s better to make a decision soon,\u201d Caroline continued. \u201cInvestors are waiting to see where you go with this, and you have a passionate team\u201d\u2014this prompted laughter\u2014\u201cthat needs its marching orders.\u201d They all nodded, but Troy wondered if everyone would support whatever call he made. \u201cSo,\u201d Kent said. \u201cAre you still Switzerland? Or are you ready to take a stand?\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Answer the following Questions:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Question 1:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Should Otto keep all 21 of its brands or prune its portfolio?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Question 2:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What do you think should be done in the case and why?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Question 3:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Explain Modelling after the Acquisition of Sheraton by Marriott.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Question 4:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Provide your concluding remarks and findings on this case.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Assignment Task Case Study: Prune the Brand Portfolio? Introduction The business-casual dress code had Troy Freeman stumped. As the long-time CEO of Otto Hotels &amp; Resorts, now the second-largest lodging company in the world, he\u2019d packed for hundreds of work trips before, but without suits as an option, he was having a much harder time. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2035","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lead Strategic Transformation Assignment - My Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/britainwriters.com\/answers\/lead-strategic-transformation-assignment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lead Strategic Transformation Assignment - My Blog\" \/>\n<meta property=\"og:description\" content=\"Assignment Task Case Study: Prune the Brand Portfolio? Introduction The business-casual dress code had Troy Freeman stumped. As the long-time CEO of Otto Hotels &amp; Resorts, now the second-largest lodging company in the world, he\u2019d packed for hundreds of work trips before, but without suits as an option, he was having a much harder time. 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Introduction The business-casual dress code had Troy Freeman stumped. As the long-time CEO of Otto Hotels &amp; Resorts, now the second-largest lodging company in the world, he\u2019d packed for hundreds of work trips before, but without suits as an option, he was having a much harder time. 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