Case Name :      We Are So Sorry: Sedang Prestige Resort

Authors :           Jim Kayalar

Source :             Ivey Publishing

Case ID :            W12792

Discipline :        General Management

Case Length :    11 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

North American and European branded hotel chains in their quest to maximize shareholder wealth have recently shed ownership of assets and freed up capital to focus on their core businesses with the help of strenuous contracts. The ensuing pursuit of further business development has expedited the internationalization process and a new business model of franchising the brand/value proposition in international locations has evolved. Globally accepted brands hold the promise of global quality. It is widely believed that Western brands deliver more value than brands from emerging nations, such that they can charge global prices to global customers. Service delivery failure is encountered frequently in the accommodation and food services industry. Such failures can act as an important performance measurement criteria. Managers are taught how to recover from service delivery failure and address loyalty issues of existing customers. They fear losing them as the cost of acquiring new customers may exceed the cost of keeping existing customers. The case illustrates how a globally branded North American hotel chain disregarded the basic tenets of maintaining the global brand promise, ignored generally accepted North American customer service standards, failed to instigate delivery failure recovery and leveraged firm specific capabilities to maximize shareholder wealth. The reaction of the local counterpart, the reaction to countermand the imbalance in the ensuing business relationship and adaptation of the value proposition are told from the perspective of a vacationing couple that experienced the diluted brand firsthand.