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CLUB MED

Club Med was the ninth largest company in the world in 1986. Competitive advantage is any advantage a
firm has over competitors. They offered some amazing vacation deals to the guest. Initially Club Med had
no direct competition and was operation as a monopoly. But things changed later when firms like Jack Tar
and Super Club enteredThey ensured satisfaction from the guest by providing a luxurious, playful and
relaxing services. They did this by taking clients feedback after their experience in Club Med and made
possible changes. The happy experience resulted the people to come back, not only that but to let friends
and family know about Club Med.Thus word of mouth advertising took place boasting sales and giving
them competitive advantage to those of their competitors. They enhanced their distribution channel by
making their packages available to travel agencies back in 1970s and early 1980s when there was a
significant rise in travel agencies just to increase consumer loyalty. So Club Med worked hard in the areas
of customer satisfaction and distribution channels that resulted booming sales and popularity in the
vacation industry
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Financial measures
According to financial statements, we can conclude that Club Med was successful and well-off
performing company with ascending net income from 7.9% to $10 million. From Exhibit 2, we can
conclude that Club Med was experiencing increase in net income, but the ROEs at shown locations had
fallen. For example, the Marriott location experienced fall to 20.6% in 1986 from 22.1% 1984. Other
locations such as Ramada and Hilton were experiencing fluctuations on Return on Sales and ROE.
Regarding the occupancy, the rooms available for guest had decreased in both North America and Asia,
and it can be seen from Exhibit 2 part III. However, this happened despite the fact that in both North
America and Asia Club Med increased their number of beds by 2032 and 750 respectively in two years.
This shows that number of customers increases, and Club Med was in workload.
Non financial measures
Club Med was introduced with competition in the laters year and they were proved to be very inefficient
due to no intention of keeping up with the new formed market. They did not keep up with competitors
that resulted lower turnovers.. However there biggest win was satisfied guest but that was initially but I
believe they can making some change retain satisfaction back. Also the commitment from employees are
important. I think this comes as GOs are rotated every six month and hence do not get bored of work.
However they have been paying very low wages and that might demotivate employees and productivity
would fall
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It can be argued Club Med was defensible and competitive. The way they dealt with the fast changing
distribution network should be applauded. They explained vividly about their packages to the travel
agencies , more sales representative were recruited, worked on their promotional efforts, appointed a
flying team to conduct seminar in north american cities and lastly but not the least creating travel agent
school and placing graduates with expert agencies. Also they stayed in the industry even when
competitors such as Jack tar were providing extravagance room with AC, double bed wine and cigars.
While another competitor Super clubs were offering activities such as surfing, telephone etc. They stood
out because because by offering tidy rooms, buffet that allowed interaction with others. One of the things
they did was offer company to the single clients although same sex so that they do not feel left out. Other
activities such as music and dance followed by dinner. They made sure disco was far from the bedrooms

so that guest who wanted to go to bed early. Club Med catered the needs and wants of all guested that led
to a happy experience. They were defensible because destinations had a natural weather for guest to enjoy
with a serene beauty of the nature and recreational potential
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The new competition was not a threat at all or maybe not a significant threat as Club Med coped up with a
changing time. At one point they had no direct competition and was running as a monopoly. But times
changing and more firms entered but they kept on maintaining their quality. One of their threat could be
there packages were all inclusive but guests need to pay for the bar. Their competitor Super clubs were
doing all inclusive and guest did not have to pay for anything in the resort. This might be convenient for
some guest who didn't have to think about finance. A good amount of their guest were graduates and
young people. Lack of activities such as surfing and nude bathing offered by competitors could be a
threat. At that time Jac Tar had some fasinating deals. The swimming pool they offered to the guest was
known as the largest in the western hemisphere. Not only that their sites had beauty salons, movie theatres
and casinos. These were definitely more appealing features to any guest. They were serving free booze
and cigars to the guests. However Club Med had a classy reply to this that they give out free wine after
dinner because thats the European Way!
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As stated that 60% of the customers were new customers at Club Med 65% of whom chose travelling
through Club Med because someone who experienced true formula offered only from there suggested
our company. This statistics data shows that how authentic Club Med is with great word-of mouth power
which is around 65%. It indicates that 65 out of 100 potential customers turned out to be real customers
followed by good reviews on Club Med. Furthermore, this becomes Club Meds most important
marketing tool and a competitive advantage against its main competitors. Although the competitors offer
variety of activities that attracts customers, in terms of understanding customers needs Club Med handles
in a professional way that actually satisfies customers and creates values regarding their service. For
example, Club Meds good choice of desired locations, family spirit of GO teams, friendly and calm
atmosphere that helps customers form lifetime memories rather than sticking to tight schedules, different
service concepts referring to different destinations and cultures, and mostly the authenticity that Club
Med offers to its customers can be listed here.
Therefore, for new customers it is important whether Club Med can reach their expectation. According to
Exhibit 12, overall experience shown to be excellent by 125 and disappointing by 10 in Ixtapa, Mexico
which indicates new customers high value of their experience with Club Med.
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The companys culture had a positive impact on the firms performance. They went by the propaganda
family spirit and it was the most eloquent part of their culture.Club Med isnt new to the game. They
have been in operating for 30 years from now. Yet somehow, during all that time, the company has
managed to communicate its goals and vision to employees in a way that makes them a part of a unified
team. They also gives employees permission to go that extra mile to make customers happy,
empowering them to do what they need to do to meet that vision. The Go team generated from the Club
Med was a very successful team that provided the true formulae. They contributed to the company
success significantly.The employees received a $400 salary a month and a room and board that costed
them $250 a month. Although they treated their employees as a fixed cost because regardless of any
increase in guests they did not want to recruit more people. However this might have caused a lot pf
pressure during vacation seasons or other peak times causing the managers to stress if there were too
many people. It can strongly criticized that employees should not be treated as a fixed cost rather there

associated cost should solely be related to productivity. Also exhibit 6 clearly says that Club Med always
tried to keep wages as low as possible. This might led to unhappy employees reducing
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So from exhibit 1 and 5 it can suggested that Club Med did attract a lot of customers as they were
operating in so many countries and had so many facilities. France was a popular destination among guests
and Ireland was the least popular. The data also suggest that some countries were not operated to their
potential. So what Club Med needs to do is not to increase the overall service quality but increase in
places where they are not operating in their potential. By doing so so, sales are likely to increase. They
can increase the service but conducting statistical research because cultures depend from country to
country. They need to consider the retreats people want there. However doing so the costs might increase.
If sales would increase also depends on peoples affordability too. Sales are unlikely to rise if they price of
packages are too high and clients cannot afford it. They can try providing activities such as soccer, nude
bathing, surfing, tennis etc and try keeping the price as competitors. The strategy might prove to be hit for
them. Because Club Med started this industry. They are the leaders. They should just try to hold on their
authentication

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Club Med do have many opportunities to increase service quality. One of the most basic one is expanding
activities. They may also work on their distribution channel. According the case only 2000 packages were
sold from the travel agencies. This might involve approaching more travel agencies and offering them
good deals so that sell Club Meds packages more than the competitors. This might involve offering them
commissions or a package for vacation after they have sold certain number of packages. They might want
to create a happy and motivating environment for the employees. This might include offering them a
higher wage and benefits. Also recruit more employees during peak seasons so there will be less work
stress. Club Med is in a good position in the market. Their propaganda of family spirit attracted guests
who were so satisfied that led to word of mouth advertising. As a result more guest and more sales. I
believe they still can stand out from competitors because they spend less or not at all promoting, since of
the clients are repeat or came here hearing from family and friends. From exhibit 14 we can say Club Med
is an innovator and do not need major changes but small ones such as offering double beds, clean rooms
etc. All these changes might be costly in the short term but is significant to long term profits.
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There are certain things that Club Med needs to work on. To start it off is that they are french oriented.
This might explain that France is the most popular destination with the highest number of guest. Maybe
because of that they are operating below capacity at other other countries. Its because culture varies and
competitor might use this as a negative tool. Second is they might want to specialize otherwise
competitors might specialize and become a niche market then fighting that would be way too difficult.
However Club Med is known for offering a refreshing experience. And they sticked to their
authentication. While the competitors upgraded they didnt. However they did not lose customer rather
was always appreciated. For guests convenience they should come with all inclusive packages where
everything for holiday will be paid in advance and guest do not have to worry at all. Last but not the least
according to exhibit 14 the employees feedback is that Club Med were not coping up with changes in the
market. What Club Med forgets is that now they are not the only firm in the industry. They have
significant competitors providing some high scale services so them being so inefficient will be costly.
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Lastly to conclude Club Med was too reliant. They started off well but as competitors came they became
inefficient. They did not cope up with changes for which sales and profit fell. However I believe Club
Med can overcome this very easily. They are known in the market all they just need to do is retain their
position back. They can do this by matching to their competitors or simply by working on the company
weakness. After thoroughly studying the case I strongly feel there is between the company and the
employees. They should start taking employee feedback then only they would know what guests truly
wants. As stated earlier they are an innovator and guests are likely to prefer them over anyone working on
those little flaws will get them back their reputation. And then those sales and profit figures will keep
rising. They need to do more cultural studies. The fact that they operating below capacity is a loss for
themselves. Working on those and operating at full capacity will increase efficiency and profits. Also as
they target more people, they become known and hence can be entitled to a good amount of market share