Abstract
Strategic models like Porter's (1985) value chain have not been fully evaluated in the strategy literature and applied to all industries. To theoretically redefine the value chain technique, this research evaluates the value chain's use with various strategic issues by applying it to a specific aspect in the service field, namely the hotel industry. The study defines five key questions by which to evaluate a strategic model and the value chain model is examined using them. This research is a strategic theory-based study involving in depth field work on five hotels in order to seek answers for the five key strategic questions. In particular, the value chain of the hotel rooms divisions is discussed based on the field research findings. The research results show that the value chain technique is a useful strategic tool in most areas and that it can be also developed for hotel strategy. However, some of the commonly accepted issues about the value chain model have been challenged by this research. To further the theoretical development of the value chain, these issues are argued in each answer of the five strategic questions. Applying the value chain model for hotel strategy seems to require somewhat different factors from applying it for manufacturing. These are the key findings of this research. First, for strategic process, the hotel value chain model can be developed in the combination approach which combines the planning school and the incrementalism school. Second, the value chain is a very useful tool analysing most strategic issues, especially a firm's internal analysis, designing structure and performance measurement. Finally, unlike the traditional value chain for manufacturing, this study identifies that the value chain technique for service could be a more useful strategic tool for soft factors such as politics, culture and leadership than hard factors such as cost and margin.