The following assignment is to undertake a strategic analysis of the French package holiday company Club Méditerranée, or as it will be mentioned by its more common name in this report, Club Med. Moreover, this report will investigate whether or not Club Med is able to recover from their shrinking profitability of the last decade and turn the company back into what it used to be – the market leader in the all-inclusive industry.
Club Med is the original founder of the so called “all-inclusive holiday” concept (Club Méditerranée, 2010). Since its foundation in 1950 by the former Belgian water polo champion Gerard Blitz, the corporation has set out to become the largest organization in its industry, becoming a Public limited company along the way in 1963. As mentioned on the previous page, the former CEO of Club Med, Philippe Bourguignon, once described the company’s ultimate objective as bringing happiness to its customers.
Nowadays, Club Med has 75 villages on five different continents and hence, operates in 40 countries. This worldwide expansion of Club Med is one staggering sign that the matured “all-inclusive holiday” industry seems to have enough demand in order to be profitable. Especially since the worldwide financial crisis hit in 2007/2008, consumers want the ability of controlling their budgets in times of an economic downturn. As a result, statistics show an increase in demand for “all-inclusive” holidays in the last couple of years. According to figures of the Travelweekly homepage in 2009, more than one quarter of customers decided to book all-inclusive.
However, since the all-inclusive industry has evolved into an immeasurably diversified sector (Travelweekly, 2010), specific boundaries have to be set to Club Med’s industry in order to undertake a reliable strategic analysis. Hence, the industry in which Club Med operates in can be defined as worldwide, year-round, all-inclusive holiday (Club Méditerranée, 2010). Furthermore, all analytical models in this report will focus on the “worldwide, year-round, all-inclusive holiday” industry.
Table of Contents
1. Intoduction
2. Task A – Analysis of Club Méditerranée Business Environment
2.1. PESTEL Analysis
2.1.1. Political aspects – impact 5 of 5
2.1.2. Economic aspects – impact 4 of 5
2.1.3. Technological aspects – impact 3 of 5
2.1.4. Environmental aspects – impact 4 of 5
2.2. Porter’s 5 Forces Analysis
2.2.1. The Threat of Entry
2.2.2. The Threat of Substitutes
2.2.3. The Buyer Power
2.2.4. The Supplier Power
2.2.5. The Competitive Rivalry
2.3. Critical Success Factors
2.4. Lifecycle Analysis
2.5. Summary of Opportunities and Threats
3. Task B – Analysis of Club Méditerranée Strategic Capability
3.1. Value chain
3.2. Value Network
3.3. Competitive Advantage
3.3.1. Threshold Capabilities
3.3.1.1. Threshold resources
3.3.1.2. Threshold competences
3.3.2. Capabilities for Competitive Advantage
3.3.2.1. Unique resources
3.3.2.2. Core Competences
3.4. Financial Capability
3.5. Sustainable Competitive Advantage
3.6. Summary of Strength and Weaknesses Analysis
4. Task C – Analysis of Club Méditerranée Strategic Fit and Direction
4.1. Strategic Direction
4.2. Strategic Fit with Environment
4.3. Summary of Task C
Objectives and Topics
This report provides a strategic analysis of Club Méditerranée (Club Med) to evaluate whether the company can recover from a decade of declining profitability and reclaim its position as the market leader in the all-inclusive holiday sector.
- Macro-environmental analysis using the PESTEL framework.
- Industry structure evaluation via Porter’s Five Forces.
- Assessment of internal strategic capabilities, including value chain and competitive advantages.
- Strategic fit analysis regarding future growth directions and market positioning.
Excerpt from the Book
3.3.2.1. Unique resources
Club Med does have unique resources at its disposal. These can be differentiated into Tangibles and Intangibles. First, the focus will be on the Tangibles.
With Club med being the pioneer of the all-inclusive holiday industry, they were able to purchase the best properties worldwide since they were the very first organization to enter today’s most famous destinations. Especially in the 1960s, a time in which Club Med experienced a strong growth, Club Med acquired exquisite properties such as the Punta Cana Resort in the Dominican Republic or the Gregolimano in Greece. Nowadays, these properties can be counted as one of the most valuable properties on the planet (Focus-Money, 2010).
Furthermore, Club Med introduced in 1989 the first passenger cruise of an all-inclusive holiday company with the maiden voyage of “Club Med I”. Only two years later, Club Med placed the second passenger cruise of its kind, “Club Med II”, on the market. However, due to financial reason Club Med sold “Club med I” in 1997 (The New York Times, 1997). Nonetheless, the remaining cruise “Club Med II”, that is shown in the picture below, helps to underpin a competitive advantage as no other all-inclusive holiday company has a cruise.
In addition, Club Med will reopen the resort “Club Sandpiper Bay” in Florida after a total transformation into a “Premium Sports” resort. From December 2010 on, Club Med will host an Elite Academy of Tennis and Golf. Moreover, the Academies will be led by famous sport veterans (Travel Agent Central, 2010).
Summary of Chapters
1. Intoduction: Outlines the scope of the strategic analysis and the research objective regarding Club Med’s recovery and market leadership.
2. Task A – Analysis of Club Méditerranée Business Environment: Examines external influences through PESTEL and industry competition using Porter’s Five Forces.
3. Task B – Analysis of Club Méditerranée Strategic Capability: Analyzes the company’s internal resources, competencies, value chain, and financial performance to identify strengths and weaknesses.
4. Task C – Analysis of Club Méditerranée Strategic Fit and Direction: Evaluates the company’s strategic choices using Bowman’s Strategy Clock and assesses the alignment of their current strategy with future market opportunities.
Keywords
Club Méditerranée, Club Med, all-inclusive holiday, strategic analysis, PESTEL, Porter’s Five Forces, competitive advantage, value chain, strategic fit, Bowman’s Strategy Clock, financial performance, market expansion, resort management, tourism industry, profitability.
Frequently Asked Questions
What is the core purpose of this strategic analysis?
The report aims to evaluate the strategic position of Club Méditerranée and determine if the company has the capability to reverse its decade-long decline in profitability and regain its status as a market leader in the all-inclusive holiday sector.
Which frameworks are used to analyze the business environment?
The analysis utilizes the PESTEL framework to understand macro-environmental factors and Porter’s Five Forces to evaluate the competitiveness and attractiveness of the industry.
What is the primary objective of Club Med's current strategy?
The primary goal is to reposition the company into the upscale segment of the all-inclusive industry, moving away from 2-3 Trident villages toward 4-5 Trident resorts to improve profitability.
How is the company’s internal capability assessed?
Internal capability is assessed through an examination of the company's value chain, unique resources (both tangible and intangible), core competencies, and a review of financial statements from the last decade.
What geographical expansion is mentioned as a key strategic move?
A central strategic goal is to expand operations into the Asian market, with a specific commitment to make China the company's second-largest market by 2015.
What are the main thematic pillars of this research?
The key themes include environmental scanning, internal capability analysis, competitive positioning, and the assessment of strategic fit within an evolving global tourism landscape.
How does the financial state of Club Med impact its strategy?
The company faced significant losses and declining profitability, largely driven by high fixed costs from property ownership and the impact of global crises, which necessitated a strategic pivot to an upscale service model.
What role does the "Club Med" brand play in its competitive advantage?
The brand is viewed as a rare and valuable intangible resource that stands for experience, freedom, and spontaneity, serving as a primary differentiator in a highly competitive market.
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- B.A. Martin Hellmund (Autor:in), 2010, Club Méditerranée - A holiday company on the road to recovery?, München, GRIN Verlag, https://www.grin.com/document/203710
