The GSPA Strategic Alliance, Research Proposal Example

Research Question

Should Gspa form a strategic alliance with Travelgolf and Leisure Services Pte Ltd to extend their consumer base to tourists visiting Singapore?

Theoretical Framework

First and foremost, it is the marketplace that determines business realities (Aileron, 2011). Customer preferences are what they are, and although a company can and should try to shape them through innovation, fundamentally there comes a point when every company must either follow the market or perish. By following the market, a company can align itself with reality, achieving the focus and clarity it needs to provide successful product and service offerings. Adopting this mindset is crucial for any organization to be able to divine what changes are required to align itself with market realities. Once it has identified what it needs to do, the organization must then identify all necessary capabilities and skills and then develop and implement them (Aileron, 2011).

This is the situation in which Gspa finds itself: the company needs to re-align itself in light of market realities. Gspa is a Singaporean spa company, specializing in exotic tropical interior designs. Luxury and tranquility have long been the cornerstones of the company’s brand image, and the basis of its appeal for customers. However, the company is now facing stiff competition from other spa providers, competition that is eroding its ability to maintain a larger customer base. What the company needs to do is find a way to distinguish itself from its competition while maintaining positive brand associations.

Tourists are the logical growth sector for Gspa. Extensive consultations with the owner of Gspa have confirmed that Singapore’s relatively limited population represents what is essentially a saturated market. Singaporean citizens have plenty of spas from which to choose, and in light of the stiff competition, there is little to be gained for Gspa in looking to them for market expansion. However, tourists are a different story: from January through October 2014, Singapore consistently averaged well over 1,200,000 tourists a month (Singapore Tourism Board, 2014; Fig. 3). The majority of these tourist came from Asia, particularly the Southeast Asian nations of Indonesia and Malaysia and the “North Asian” nations of China, South Korea, and Japan. There were also large numbers of visitors from South Asia, Europe, and Oceania. Visitors from the Americas and from the Middle East contributed much lower numbers (Singapore Tourism Board, 2014).

The key idea here is to market Gspa’s services to tourists through a local travel agency, Leisure Services Pte. Ltd., and to work closely with Travelgolf, a golfing company. The travel agency and the golfing company will help Gspa to sell 24-hour overnight spa treatments to tourists who wish to relax comfortably for a time during their vacation. Both Travelgolf and Leisure Services will be offering 30% discounts to encourage tourists to purchase the entire tour package. This strategy is compelling, because it allows the company to tap into a market that is constantly renewing and turning over. The travel agency will provide what is in essence a pipeline for Gspa, funneling tourists to the company. Similarly, Travelgolf’s tourist audience are a good sector for Gspa to advertise to as well: after all, tourists who have spent the day out on the green in the tropical sun might decide a spa sounds inviting.

Collectively, Gspa, Travelgolf and Leisure Services stand to gain larger consumer bases from this collaboration. Their interests are complementary, so the alliance is a very strategic and sound one. Another key point is that the tourists will have less time and inclination than locals to shop around for different spas. Moreover, satisfied customers will carry word back to their home countries, helping Gspa increase brand awareness and further boost revenue and profits.

Methodology

Primary Research: The first step for the primary research was to conduct an interview with Gspa’s owner. In the course of said interview, Gspa’s owner explained the nature of the situation in which Gspa finds itself: beset by stiff competition, the company has little choice but to innovate. However, the key problem is that Singapore is already essentially a saturated market for spas: locals who enjoy spas have plenty to choose from, and it is not easy to compete successfully in a market with so many options. On the other hand, the tourist sector is considerable. It was determined that this was the best direction for the company to go in. A key way for the company to differentiate itself would be to offer tourists special promotional deals in collaboration with other hospitality- and tourism-oriented businesses.

The second step was to conduct an interview with Travelgolf and Leisure Services Pte. Ltd.’s owner. Both companies are good potential partners for Gspa, because both are heavily geared toward tourists. The premise was that both companies would benefit from the collaboration, since Gspa’s services would help to draw more customers. The interview went well, and the owner of Travelgolf and Leisure Services Pte. Ltd. expressed interest in the business collaboration.

The next step was to administer a questionnaire to all employees of Gspa, asking them about their views of this business strategy. Responses were mixed but mostly positive, with some expressing skepticism about the move but most expressing positive opinions. The step after this was to conduct an online survey with Singapore tourists to ascertain whether they would like a chance to indulge in a 24-hour treatment. Not surprisingly, this proved a popular offering, with positive responses from those surveyed. Thus, the way seems clear to implement this strategy in combination with the company’s partners.

SWOT Analysis (Fig. 1)

The benefits of SWOT and PESTEL analyses are considerable. Both of these tools enable a company to properly survey the strategic environment in which it operates, and take account of important factors that should guide its decision-making process.

Strengths: Gspa has a great many strengths working in its favor. First and foremost, the company has a large space, one that is eminently capable of accommodating tour groups and customers. This sets Gspa apart from its rivals, which lack such large spaces with which to accommodate people. A second strength lies in the flexible working hours that are already a key part of the organizational culture at Gspa. Employees are already used to working varying hours.

Other aspects of the company experience and image are considerable strengths which set it apart from the competition. The food gourmet available is different from those of Gspa’s rivals, an excellent asset to leverage in order to attract tourists. The company also has a strong marketing background, since it has appeared in so many local magazines and newspapers. This will come in handy for extending its appeal to tourists. Indeed, brand image is an important part of what sets Gspa apart: it has been awarded top excellency brand status for the Asia-Pacific region. The company also targets specific market segments in its advertising, placing ads in both men’s magazines and women’s magazines. There are also many staff and therapists available to cater to customers’ needs. Finally, the company has a unique concept, the tropical 24-hour spa with cuisine.

Weaknesses: The company’s large space can be a weakness as well as a strength. It imposes a high fixed cost on the company, meaning the company must also charge more for its services in order to profit. This means it has a higher cost compared to its rivals. It also faces a limited customer base, due to the fairly small population of Singapore and the pressure of competition from other spas. The location is not in town, which is somewhat inconvenient from the standpoint of attracting customers. Moreover, Singaporeans are a busy folk, and seldom have time to relax. The company has a limited presence in other countries, which will make for a significant challenge as it seeks to expand its presence. It is also difficult to hire local staff who are fluent in English.

Opportunities: There are more tourists visiting Singapore. As the tourism sector burgeons, so too does Gspa’s opportunity to work with Travelgolf and Leisure Services. Travelgolf and Leisure Services are willing to work with Gspa, so the company is off to a good start here. The workers do not mind working longer hours, particularly because of the company’s strong organizational culture for flexible hours. The building is also fully operated and owned by the company, making for flexible hours of operation as well. Another, somewhat more risqué, source of opportunity is the company’s proximity to Singapore’s red light district, which is a tourist attraction.

Threats: Rival competitors are opening stories island-wide, compared with Gspa’s single location. This means they have more brand exposure, something that is likely to become more significant as the tourism boom continues and possibly deepens. More companies, like Kenko, are providing spa reflexology, which could undermine Gspa’s particular position.

PESTEL Analysis (Fig. 2)

Political: Here there are relatively few concerns. Spas are a luxury service, and Gspa is working in an environment where there are many of them and they are an accepted part of society. With tourism booming, the political climate for spas is likely to remain favorable.

Economic: Here the news is favorable. With tourism booming, it is likely that Singapore’s economy will be performing very well indeed. Tourists to Singapore are likely to come looking for luxurious experiences: as an affluent city-state on the Straits, it is not the kind of place one visits for nature or even for historical and cultural treasures.

Sociocultural: As seen, Singaporeans themselves are a very busy people, and they are not especially inclined to visit spas. Of course, some of them do, and the problem Gspa is having is that they have so many spas to choose from. Tourists, however, are a different story: they are more likely to come to Gspa through the discounted deals offered by Travel and Leisure Services Ptd. Ltd.

Technological: Technology is important to the spa industry. After all, reflexology is spreading, and Gspa should expect it to continue to spread. It will be essential to stay on top of technological innovation, something that will also necessitate ensuring staff are trained in the latest technologies.

Environmental: The environment is not the kind of dimension that seems likely, at first, to impact the spa industry. However, a concern for living more “natural” lifestyles often goes hand-in-hand with fitness, and this could work to Gspa’s advantage. Another possibility is that Singapore’s tropical climate will drive some people to want to spend time in a spa: if they are going to be hot and humid, they might reason it would be better to be hot and humid in a relaxing atmosphere.

Legal: The company will need to comply with all Singapore laws. Singapore requires a Massage Establishment (ME) license for massage services, foot-reflexology services, manicure treatments, spa baths, and other similar treatments. There are two categories, Category I and Category II. Category I is the one most spas opt for, because it allows them unrestricted operating hours, the ability to serve alcohol, the ability to admit customers of all ages, and the ability to employ foreign masseuses or therapists (Hawksford, n.d.).

Secondary Research

Gspa can expect stiff competition to continue. Spa World in Osaka, Japan, may lure visitors to that country. There are also many spas in Singapore, offering a variety of services. Gspa made it onto a list of the eight best spas in Singapore, as ranked by TimeOut(Hong, 2014). However, the competition is formidable indeed, with competitors like Auriga Spa and Willow Stream Spa offering services that are comparable with Gspa’s in many ways (Hong, 2014).

Anticipated Difficulties

As with any business venture, there are a few possible problems to note up front. First, it is possible, indeed probable, that not all employees were completely honest in their feedback. Employees have a tendency to want to put their best feet forward and say the kinds of things they think their bosses want to hear, so it is entirely likely that some of them were not entirely truthful. It is therefore possible that there are conflicting opinions that were simply not captured in the research. Some employees might not want to work midnights, but might feel obliged to do so without objection.

Another problem is the seasonal nature of the tourism business. The company will have to find a way to make do in times when there are fewer tourists. Monsoons, for example, may diminish the amount of tourists who wish to come to Singapore. Seasonal shifts are to be expected in this business.

Competition with rivals is likely to feature prominently on Gspa’s strategic landscape for the foreseeable future. The company has a good strategy, but it is still operating in a highly competitive environment. It is probable that competitors will seek promotional package deals with other providers of services to tourists. Gspa will also have to work hard to establish its reputation abroad, given that the company is not widely known outside of Singapore. This will mean persevering for quite some time, particularly because the tourist consumer base will largely consist of first-time visitors. This is the one main drawback about marketing to tourists: they are not likely to come back next week, or next month. Nonetheless, the company has many reasons to regard the future with a healthy optimism for the prospects that lie ahead.

Action Plan

References

Aileron. (2011, December 16). Theory of business. Forbes. Retrieved from http://www.forbes.com/sites/aileron/2011/12/16/theory-of-business/

Hawksford. (n.d.). Starting a spa in Singapore. GuideMeSingapore.com. Retrieved from http://www.guidemesingapore.com/industry-guides/healthcare-industry/starting-a-spa-in-singapore

Hong, N. (2014, November 28). The best spas in Singapore. TimeOut. Retrieved from http://www.timeout.com/singapore/spas/the-best-spas-in-singapore

Singapore Tourism Board. (2014). International visitor arrivals statistics. Singapore Tourism Board. Retrieved from https://www.stb.gov.sg/statistics-and-market-insights/marketstatistics/ivastat_jantooct_2014%20(as@29dec14).pdf