El Castillo: the Eco-fairy Castle
This paper presents a discussion on questions based on the case study of El Castillo: the Eco-fairy Castle
Questions 1. A. Identify the key resources and capabilities that were critical for El Castillo developing a successful strategic advantage in the face of difficult external challenges.
Three categories of resources are tangible, intangible, and human resources, whereas the capabilities are the firm’s ability to turn its resources and put them to productive use. Thus, this two are necessary for an organization to develop a successful strategic advantage over competitors, just like the Fabregas family realized. Despite numerous challenges that the family faced, such as little knowledge in hotel industry, poor and uneducated workforce in Cordoba and working on the backdrop of economic recess, Fabregas vision could not be dampened as they were determined to renovate and revive the castle in three-years amidst economic turmoil and skepticism.
Thus, the critical resources used for El Castillo included family’s savings and sales of old home and the location or suitability of the castle. The Fabregas realized the site had the potentiality of attracting guest or visitors that valued and respected the environment through the ecotourism for the castle. At the same time, the castle would act as a corporate social responsibility (CSR) by working and fostering community relationship through conservation of the environment. Other resources included combination of expertise and experiences the family had such as medical, university and consulting while human resources was include expertise skills from diverse backgrounds they brought and use of local labor. The family hired and directed a team of local labor force and personally purchased equipment, designed and managed the project.
In terms of capability, the family worked in unity as a team in order to rebuild the ruined castle and restore its tainted reputation after being used by union workers who never attended it. For instance, Adriana made all the decorations and paintings while his brothers’ fresh from university, brought their knowledge, and practiced what they had learned by helping in running of the project. Raul and Susana had experiences in developing and managing projects. This project accorded them opportunity to manage and run the El Castillo Hotel.
Furthermore, by setting the mission, vision and values by the Fabregas, it gave them a road map, encouraged them not to give up rather surge ahead. In addition, use of piecemeal organizational structure method towards realization of their goals, controlled all the business and thus, enabling growth of the El Castillo hotel amidst adverse external conditions in Argentina.
- Analyze the strategic decisions El Castillo made at each stage of the value chain – purchasing, operations, marketing, sales/distribution
El Castillo involved a number of strategic decisions made at different stages of the value chains as discussed below.
Purchasing was led Eduardo and he only bought goods when they were required and prevented buying unnecessary stock that could cause the organization. This was aimed at reducing inventory cost. At the same time El Castillo purchase were aimed at conserving the environment for instance, the purchase of environmental friendly air conditioners and use of rainwater and recycling of the pool water and energy conserving, waste minimization, use of solar energy and recycling of furniture were all measures aimed at cutting the purchasing cost.
Adriana and Susana led operation; they outsourced instead of hiring experts where they saw the facility could not handle the task and it could have required input of extra staff to minimize cost. For instance, they outsourced legal and accounting jobs while a section of reservation system was also outsourced to increase productivity.
Adrian led the marketing and he developed programmes and marketing for the divisions and hired outside press to develop and write marketing articles for publication. In addition, he trained 50 employees to attain customer satisfactory and feedback. Use strategic billboard ads in airports to sale and attract potential visitors. He also used word of mouth to advertise this cuts high expenses that come with advertising.
The marketing strategies were feasible as they contributed to higher return customers among the guest booked at the hotel and the fact that the facility was the only ecotourism hotel in Argentina gave El Castillo a unique market niche thanks to its marketing strategy.
Sales and distribution targeted two channels of the business divisions and they included Turismo vacacional and Fabregas organizational center. These two segments targeted both local customers from Buenos Aires and international corporate guests and entailed different services and season that came with unique packages in both categories. The Fabregas ensured it retains their guests by ensuring the environment was fresh and conducive aimed at making visitors feel comfortable, relaxed and away from their daily routine life experiences.
The facility has no television sets in the rooms; its atmosphere is treated with right aromatherapy while its drinks and meals provide a variety of foods for the clients to choose. Its packages are clearly stated and the rise in the prices for adult package shows a great demand for the package around the facility. The corporate bodies are given quoted price with limited discounts allowed to ensure profit.
Do their actions throughout align with the vision, mission and values they established in the beginning?
There is no doubt that their operation and other activities in the hotel go in hand with its vision, mission, and values. Considering their vision, “to become an international icon of eco-tourism while protecting and highlighting the local culture.’ the family has maintained the originality of the castle and it gives back to the community through employment and use of native food.
Its mission states, “to provide services that, by means of innovative techniques, help guests develop their intellectual, artistic, sport, and interpersonal skills.’’ Fabregas has lived to this by providing workshop, training and educational programs to various groups such as guests, family and corporate members. Conducive environment provides guests with opportunities to engage in various activities such as meditation, sports and arts without disruption.
Its values states, “respect for history, culture, and nature. Passion for creative innovation in services. Admiration for people’s creativity potential.” The family has kept the values by retaining the original structure of El Castillo and preserving nature through ecotourism and adapting environment conservation actions. It creates creativity and innovation opportunities through drawings and hosting show for the guests after dinner.
- Draw a value curve for El Castillo and for a traditional hotel.
Value curve is a tool used strategically by managers to see visually how the tactic works and it consist of group of things important to the organization for instance a hotel will have taste, price and location on the value curve. The curve depends on how important each thing is to an organization.
To create a curve it is advisable you think about which things are important in your industry and how important each thing is for the company. Thus, you have to change how you value things and find things to value that other companies are not even thinking yet to redraw the value curve (Schaar, n.p).
Value curve for El Castillo and for a traditional
Competitive factors
Would you consider the Fabrega family a value innovator? Explain why or why not?
I will consider Fabregas family as value innovators considering the fact that they were able to turn their idea by renovating El Castillo into a recognized five star hotel and in the end providing services to the guests that created value in terms of profits.
Value innovation is a key concept in blue ocean strategy that stress on differentiation and low cost. For instance, the family makes saving on the costs of running business by reducing factors likely to cause operating cost during spending. In addition, innovation is evidence by the way the family offers its customers what they need at affordable cost and allows them to use various amenities at the hotel.
Thus, Fabregas is value innovators as it was able to identify the existing gap in the market and despite of running short of finances they involved a number of strategies in the market mix such as product differentiation and marketing and sales to promote the hotel and took responsibility of managing the business themselves shows how innovative they were.