Strategic Management for Tourism & Hospitality - Management Essay Example

Strategic Management in Hospitality and Tourism July 2011 www - Strategic Management for Tourism & Hospitality introduction. cthresources. com Page 1 www. cthawards. com 1 Content I. II. Summary of Learning Outcomes LO 1 – Evaluate the use of strategic plans for a hospitality or tourism organisation III. LO 2 – Produce an outline strategic plan IV. LO 3 – Develop a strategic implementation plan for hospitality or tourism organisations V. LO 4 – Develop a strategic implementation plan for hospitality or tourism organisations www. cthresources. com Page 2 www. cthawards. com Learning Outcomes Summary of Learning Outcomes

On completion of this module, students will be able to: ? ? ? ? Evaluate the use of strategic plans for a hospitality or tourism organisation Produce an outline Strategic Plan Develop a strategic implementation plan for hospitality or tourism organisations Design monitoring mechanisms to evaluate the success of hospitality or tourism strategy www. cthresources. com Page 3 www. cthawards. com Content I. II. Summary of Learning Outcomes LO 1 – Evaluate the use of strategic plans for a hospitality or tourism organisation III. LO 2 – Produce an outline strategic plan IV.

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LO 3 – Develop a strategic implementation plan for hospitality or tourism organisations V. LO 4 – Develop a strategic implementation plan for hospitality or tourism organisations www. cthresources. com Page 4 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Objectives Assessment Criteria šŸ˜• ? Define the concept of strategic planning within hospitality or tourism organisations Explain the value of strategic planning for a hospitality or tourism organisations www. cthresources. com

Page 5 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation References Reference list:? ? Handbook of Hospitality Strategic Management 1st ed. Olsen, Michael D. ; Zhao, Jinlin Strategic Marketing Management : Planning, Implementation and Control 3rd ed. Wilson, R. M. S. ; Gilligan, Colin www. cthresources. com Page 6 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Firms should first analyse their resources and appraise their strengths and weaknesses relative to their competitors, as well as identify opportunities to better utilise them ? Then, firms should identify their capabilities (i. e. , competencies) and understand what they do better than their competitors. They should gain an understanding on which resources are necessary to their capabilities www. cthresources. com Page 7 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

The Market for Strategic Resources and Capabilities Contdā€¦ ? Next, firms should appraise the rent generating potential of their resources and capabilities. And select their strategies on the basis of the best possible exploitation of their internal strength (i. e. , resources and capabilities) relative to external opportunities ? Finally, firms should identify any gap between the strategy pursued and their resources and capabilities endowment and if necessary, invest in refilling or maintaining their resource base (Andrews (1971) and Thompson (1967)) ww. cthresources. com Page 8 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ? ā€œKey to a resource-based approach to strategy formulation is understanding relationships between resources, capabilities, competitive advantage and profitability-in particular, an understanding of the mechanisms through which competitive advantage can be sustained over time ā€ (Grant ,1991 ) ww. cthresources. com Page 9 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ? In an effort to integrate apparently contrasting views of strategy, Amit and Schoemaker (1993) developed theoretical propositions that linked the RBV and the industry analysis perspectives ?

Drawing on the concept of key success factors ( Vasconcellos E Sa and Hambrick, 1989 ) and on the industrial economics notion of strategic factors ( Ghemawat, 1991 ), they linked firmsā€™ resources and capabilities to the structure of the industry ? Using Ghemawatā€™s (1991) notion of sunk cost, they stated that ā€œ When the industry (or product market) is the unit of analysis, one may observe that, at a given time, certain Resources and Capabilities which are subject to market failure, have become the prime determinants of economic rentsā€ www. cthresources. om Page 10 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ? Additionally, they argued that these Resources and Capabilities-labelled strategic industry factorswere characterised by their propensity to market failure and consequent asymmetric distribution over firms. In contrast, by focusing on the firm unit of analysis, unique bundles of resources and capabilities can be identified that enable the firm to earn economic rents The authors labelled these firm-specific resources and capabilities strategic assets. Further, they argued that the rent-generating potential of these strategic assets was dependent on their applicability to a particular industry setting (The overlap with the set of Strategic Industry Factors (P40)) www. cthresources. com Page 11 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ?

The authors concluded that strategic analysis would gain from a more multidimensional approach, including both industry structure, defined by strategic industry factors and environmental forces, and firms-specific strategic assets that are asymmetrically distributed within the industry www. cthresources. com Page 12 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ Strategic Assets and Strategic Industry Factors Resources ? Externally available and transferable ? Owned and controlled by the firm ? Convertible ?

Strategic assets A subset of the firmā€™s R&C subject to market ? failure ? Overlap with SIF ? Uncertain ex-ante ? Form the basis of the ? firmā€™s competitive ? ? ? ? ? ? ? ? Capabilities Information-based organisational processes Firm specific Tangible and intangible Intermediate goods Rivals Industry Strategic industry factors ? Industry specific ? R&C subject to market failure ? Affect industry profitability Customers Substitutes Determine organisational rents Non-tradable Scarce Strategy Appropriate Firm specific Entrants ? Change and subject to ex ante uncertainty Environmental Factors (e. g. technology, regulation) Suppliers Reproduced with permission from Amit and Schoemaker, Strategic Management Journal. Ā© 1993 by John Wiley & Sons Limited. ) www. cthresources. com Page 13 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ? In another attempt to theoretically synthesise and clarify the earlier works on the RBV, Peteraf (1993) proposed a model describing four conditions to gaining a sustainable advantage through resources ? To her, all four conditions need to be met if firms want to generate superior rents on the long run (i. . , earnings in excess of the cost of capital) www. cthresources. com Page 14 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ 1. The first condition is that firms should be heterogeneous in a given industry and that superior resources exist in limited supply ? These superior resources enable firms to produce at a lower average cost than competitors with inferior resources and as they are limited in supply, efficient firms are able to sustain that competitive cost advantage www. thresources. com Page 15 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ 2. The second condition results from the need to maintain some degree of heterogeneity across firms ? What the author coined as ex post limits to competition refer to forces that restrict competition for rents that have been gained by a firm ? Some factors shaping these forces have been recognised in the RBV literature as resulting from imperfect imitability and imperfect substitutability www. cthresources. com

Page 16 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ 3. The third suggested condition is what Peteraf (1993) labelled imperfect mobility ? This notion is related to Ghemawatā€™s (1991) sunk costs and Shoemakerā€™s (1990) idea of asset specificity ? Resources that are imperfectly mobile are hard to trade as their use and value is firm specific www. cthresources. com Page 17 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

The Market for Strategic Resources and Capabilities Contdā€¦ 4. The fourth condition, ex ante limits to competition, refers to the importance of the cost of implementing strategies brought out by Barney (1986a) ? The argument is that the future potential value of resources needs to be perceived differently by competing firms so that one that perceives it as valuable can acquire it at a relatively low cost www. cthresources. com Page 18 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

The Market for Strategic Resources and Capabilities Contdā€¦ ? Whether taken from an industry structure perspective or from a firmā€™s resource side, some resources and capabilities appear to be major determinants of financial and competitive success ? ā€œ Key success factors point to the things a firm must concentrate on doing well, the specific kinds of skills and competences that are needed, and which aspects of the which internal operating activities at the most crucial and why ā€ (Thompson and Strickland (1996)) www. cthresources. com Page 19 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ? ? They also observed that these CSFs varied from industry-to-industry as well as from time-to-time To them, because such factors have to be of utmost importance to the financial success of firms, CSFs are to be related to major value adding activities www. cthresources. com Page 20 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Market for Strategic Resources and Capabilities Contdā€¦ ?

Put differently, the way firms perform on these CSFs need to have a direct and major influence on its key value drivers, be them revenue or cost related ? For example, in the beer industry, CSFs are the utilisation of brewing capacity, the dealer distribution network, and the advertising effectiveness ? In industries with high transportation costs, the location of production plants and the ability to sell products within an economical shipping distance are CSFs ? The authors highlighted that the identification CSFs, while necessary to successful planning, was a difficult task that had to be performed regularly and at industry level ww. cthresources. com Page 21 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe ? Citizen services are controlled by governments. In Europe, access to many citizen services such as public education, public health care and social services are available to all as a right of citizenship and most are free at the point of delivery As a result, some citizen services such as public health and public education have grown to be among the largest employers in a country. ww. cthresources. com Page 22 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe ? As the structural balance of an economy becomes tertiary, citizen services expand Education expands as childhood and adolescent education become mandatory and a higher proportion of the population have access to further education, higher education, continuing education and preschool education. www. cthresources. com Page 23 www. cthawards. om Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ ? Health care improves to sustain longer life expectancy and diversifies to include preventative as well as curative medicine Community health grows and paramedic disciplines such as nutrition, physiotherapy and holistic medicine advance and the prison service seeks to reform criminals in addition to their basic custodial role. www. cthresources. com Page 24 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ ? The extent to which the citizen services dominate the tertiary segment is both a political and an economic matter ? Indeed the main theme in political economy throughout the 20th century in Europe and North America was about the most effective way to provide citizen services www. cthresources. com Page 25 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or ourism organisation Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ ? Europe emphasised the moral responsibility of governments not only to provide citizen services, but also to ensure that all citizens had access to them ? In contrast, the US approach emphasised the role of citizen choice in accessing many services and that when choice was involved a market was created ? Thus, the US approach was to involve business in the provision of many citizen services www. cthresources. com Page 26 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ ? The distinction between Europe and the US in the role of the government in the provision of citizen services was at the core of the distinction throughout the century between the left wing and the right wing in politics www. cthresources. com Page 27 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ The more leftwing a government, the more its commitment to managing citizen services and the more it extends its management of the economy by taking control of key sectors including: coal, oil and gas, water, electricity, telephony, roads, rail, air transportation and any other that it deems sufficiently important to national preservation ? In these ways its commitment is to big government www. cthresources. com Page 28 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ ? The bigger the citizen services segment the more income the government needs to generate from other parts of the economy to fund the provision of citizen services ? The result is that when the market service and experience segments are minor, a higher tax burden falls on the primary and secondary segments and the poorer the quality and scope of core citizen services such as health and education www. cthresources. com Page 29 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Economic Structure and the Growth of Hotel Brands in Europe Contdā€¦ ? The more rightwing an elected government the less it is committed to the encroachment of citizen services and the more it is committed to the development of market service and experience businesses. In these ways its commitment is to smaller government www. cthresources. com Page 30 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Strategic Planning & Environmental Scanning ? The development of long range plans for the effective management of environmental opportunities and threats in the light of corporate strengths and weaknesses. Such planning includes establishing the corporate mission, specifying objectives, developing strategies and setting policy guidelines (Wheelen and Hunger (1989, p. 14)) www. cthresources. com Page 31 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Strategic Planning & Environmental Scanning Contdā€¦ ?

According to research ( Mintzberg et al . , 2005; Mintzberg, 1992; Costa, 1997 ), the development of strategies is not always carried out in such a formal way ? As found by Mintzberg, there are organisations where strategies are not deliberate but emergent. This realised approach to strategy development is likely to result in different attitudes towards the management of environmental opportunities as proposed by Wheelen and Hunger www. cthresources. com Page 32 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Strategic Planning & Environmental Scanning Contdā€¦ ? In addition to considering strategic planning activities, the emergent approach to strategy also requires clarification namely in respect of how an organisationā€™s objectives are formally defined and strategies developed ? The identification and management of environmental opportunities, however, is seen as fundamental to the competitive positioning of companies ( Garland, 2007 ; Mazarr, 1999 ; Fahey and King, 1977 ; Segev, 1977 ; Kefalas and Schoderbeck, 1973 ) www. cthresources. com Page 33 www. cthawards. om Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Strategic Planning & Environmental Scanning Contdā€¦ ? The identification of business environmental trends can be achieved using environmental scanning, which is seen by Aguilar (1967) as a way to examine information about events and relationships in a companyā€™s outside environment ? This information can then be used to assist top management in its task of charting the companyā€™s future course of action www. cthresources. com Page 34 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Strategic Planning & Environmental Scanning Contdā€¦ ? The importance of environmental scanning for organisations can be seen by looking at some of its potential outcomes: identification of events and trends in the external environment and the possible relationships between them ? An understanding of the data may help organisations extract the main implications for decision making and strategy development ( Van Deusen et al . , 2007 ; Okumus, 2004 ; Daft e t al . , 1988 ; Lenz and Engledow, 1986 ; Stubbart, 1982 ) ?

Even though it is an established activity with well-defined elements, environmental scanning is not regularly used by business organisations ( Garland, 2007 ; West and Olsen, 1989 ; Jain, 1984 ) www. cthresources. com Page 35 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Innovation ? Another operations strategy is innovation. This is essentially the strategy adopted by multiconcept restaurant chains www. cthresources. com Page 36 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Corporate Objectives Innovation Contdā€¦ ? Their strengths and competitive advantage lie in their ability to develop new concepts and make them work LEYE is not just an operator, it also offers consulting services on ā€œcorporate services, operational systems, service and hospitality, training and development, culinary development, concept creation, product development, and operator researchā€œ ( LEYE Consulting, 2004 ) ? www. cthresources. com Page 37 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦

Innovation Contdā€¦ ? For instance, the company employs an ā€œArtistic and Creative Director. ā€ Her primary responsibilities includeā€œ concept ideation, attribute development and food product stylisation ā€¦ (based on) concept board development, historical and social research, material selection and menu writing. ā€ www. cthresources. com Page 38 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ Total quality management (TQM) ? No discussion of SOM could be complete without reference to TQM www. cthresources. om Page 39 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ Total quality management (TQM) Contdā€¦ ? Many firms in the hospitality industry like to think that they have successfully adopted this strategy, but only one has undoubtedly done so-the Ritz Carlton hotel company. During the 1990s Ritz Carlton won the prestigious Malcolm Baldridge award not once, but twice ? TQM remains difficult to achieve in a service environment, largely because it is so complex www. cthresources. com Page 40 www. thawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ Total quality management (TQM) Contdā€¦ ? TQM includes concepts such as quality control and quality assurance but must be adopted across the organisation, both back-of-house and front of-house, and from the boardroom to the shop floor www. cthresources. com Page 41 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ Total quality management (TQM) Contdā€¦ ?

The challenge of this strategy may be exemplified by Ritz Carlton who identified that their housekeeping operation alone experienced 70,000 errors per one million transactions ? Their TQM goal became to reduce this level to ā€œsix sigma,ā€ that is 4. 3 errors per million and in so doing provide 100% customer satisfaction and save the company substantial cost www. cthresources. com Page 42 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process www. cthresources. com Page 43 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process ? There are several possible explanations for this, the most obvious of which is that, in principle at least, the process of setting objectives is relatively straightforward and as such merits little discussion ? The rest of the planning and strategy development process is then seen by some to follow easily and logically www. cthresources. com Page 44 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? In practice, however, the process is infinitely more difficult, particularly in divisionalised organisations or where the company has an extensive product range being sold across a variety of markets Regardless of whether we are talking about principles or practice, the sequence should be the same, beginning with an identification of the organisationā€™s current position and capabilities, a statement of assumptions about environmental factors affecting the business and then agreement among stakeholders as to the objectives themselves ? www. cthresources. com Page 45 www. thawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? In moving through this process, the majority of commentators recommend that the planner moves from the general to the specific and from the long term to the short term www. cthresources. com Page 46 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ This frequently translates into statements on three aspects of the business: . 2. 3. The nature of the current business (what business are we in? ) Where it should go (what business should we be in? ) How we should get there www. cthresources. com Page 47 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? Identifying where the company is currently is often far more difficult than it might appear, something which is reflected in a comment by the ex-Chairman of ICI, Sir John Harvey-Jones (1988): There is no point in deciding where your business is going until you have actually decided with great clarity where you are now. Like practically everything in business this is easier said than done. ā€ www. cthresources. com Page 48 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? Recognising the validity of this point should encourage the marketing planner to focus not just upon the businessā€™s current position, but also how and why it has achieved its urrent levels of success or failure www. cthresources. com Page 49 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? Having done this, he or she is then in a far better position to begin specifying the primary or most important corporate objectives, as well as a series of statements regarding the key results areas, such as sales growth, market penetration and new product development, in which success is essential to the organisation Following on from this, the planner should then begin developing the secondary or subobjectives, such as geographical expansion and line extension, which will need to be achieved if the primary objectives are to be attained www. cthresources. com Page 50 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? This process of moving from the general to the specific should lead to a set of objectives that are not just ttainable within any budgetary or other constraints that exist, but that are also compatible with environmental conditions as well as organisational strengths and weaknesses ? It follows from this that the process of setting objectives should form what is often referred to as an internally consistent and mutually reinforcing hierarchy www. cthresources. com Page 51 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ?

As an illustration of this, if we assume that corporate management is concerned first and foremost with, say, long-term profits and growth, it is these objectives that provide the framework within which the more detailed subset of operational objectives, including market expansion and product-specific increases in sales and share, are developed ? Taken together, these then contribute to the achievement of the overall corporate objectives www. cthresources. com Page 52 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? It is these operational objectives that are the principal concern of those in the level below corporate management ? Below this, managers are concerned with objectives that are defined even more specifically, such as creating awareness of a new product, increasing levels of distribution, and so on www. cthresources. com Page 53 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ?

This hierarchy points in turn to the interrelationship, and in some cases the confusion, that exists between corporate objectives and marketing objectives ? The distinction between the two is an important one www. cthresources. com Page 54 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Corporate Objectives Contdā€¦ The strategic planning process Contdā€¦ ? However, as a prelude to this, and indeed to the process of objectives setting, there is a need for the strategist to decide upon the business mission ? We therefore begin this chapter with a discussion of the role and purpose of planning as the background against which we can more realistically examine approaches to the development of the mission statement and, subsequently, corporate and marketing objectives www. cthresources. com Page 55 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Objectives, Strategies and Plans www. cthresources. com Page 56 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

The Purpose of Planning Contdā€¦ ? Planning attempts to control the factors which affect the outcome of decisions; actions are guided so that success is more likely to be achieved. To plan is to decide what to do before doing it. Like methods, plans can be specially made to fit circumstances or they can be ready made for regular use in recurrent and familiar situations. In other words, a methodical approach can be custom built or ready made according to the nature of the problems involved (Jackson (1975)) www. cthresources. com Page 57 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ? The purpose of planning can therefore be seen as an attempt to impose a degree of structure upon behaviour by allocating resources in order to achieve organisational objectives ? Business planning is a continuous process of making present entrepreneurial decisions systematically and with best possible knowledge of their futurity, organising systematically the effort needed to carry out these decisions against expectations through organised feedback (Drucker (1959)) ww. cthresources. com Page 58 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ? The three major elements of planning: 1. 2. 3. The need for systematic decision-making The development of programmes for their implementation The measurement of performance against objectives, as a prelude to modifications to the strategy itself www. cthresources. com Page 59 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

The Purpose of Planning Contdā€¦ ? It follows from this that if the planning process is to be effective, then the planner needs to give full recognition to the changing nature and demands of the environment, and to incorporate a degree of flexibility into both the objectives and the plan itself. Any failure to do this is likely to lead to a plan that quickly becomes out of date www. cthresources. com Page 60 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ?

Simmons (1972) pointed to the dangers of this both in the planning carried out by the Eastern bloc countries and by American business In the case of the Eastern bloc countries in the 1940s, 1950s and 1960s, for example, he suggests that: ? They tried to impose a fixed five-year plan on changing conditions. Unfortunately, some American businesses are still making this mistake . . . frequently a well constructed plan only six months old will be found to be very much out-of-date. ā€ www. cthresources. com Page 61 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

The Purpose of Planning Contdā€¦ ? If planning is to prove effective, there is an obvious need for a regular review process, something that is particularly important when the environment in which the organisation is operating is changing rapidly www. cthresources. com Page 62 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ? As an example of this, Chisnall (1989, pp. 133ā€“4) has pointed to the Post Office and the increasingly competitive environment it faced following the Post Office Act of 1969, which: ā€œ. . . transformed the Post Office from a Department of State into a State Corporation that had to achieve a predetermined level of profits The establishment of a marketing department in 1972 added to the keen commercial awareness and new professional skills which were needed to tackle, for instance, the fast-growing and aggressive competition in parcels traffic from several new market suppliers. ā€ www. cthresources. com Page 63 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ?

The principal purpose and indeed benefit of planning can therefore be seen in terms of the way in which it imposes a degree of order upon potential chaos and allocates the organisationā€™s resources in the most effective way ? Among the other benefits are the ways in which the planning process brings people together and potentially at least, leads to ā€˜a shared sense of opportunity, direction, significance and achievementā€™ www. cthresources. com Page 64 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ?

The planning process can therefore be seen to consist of four distinct stages: 1. Evaluation (Where are we now? , Where do we want to go? , and What level of resource capability do we have? ) Strategy formulation (How are we going to get there? ) Detailed planning Implementation and review 2. 3. 4. www. cthresources. com Page 65 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ? For many organisations, it is the implementation stage that proves to be the most difficult, but which paradoxically receives the least attention ww. cthresources. com Page 66 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Purpose of Planning Contdā€¦ ? There are several possible explanations for this. Peters and Waterman (1982, pp. 9ā€“12), for example, suggest that all too often emphasis is placed upon what they refer to as the ā€˜hardballā€™ elements of strategy, structure and systems, with too little recognition being given to the significance of the ā€˜soft-ballā€™ elements of style, skills, staff and subordinate systems www. cthresources. com Page 67 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Problems of Marketing Planning ? Too little support from the chief executive and top management. As a result, the resources that are needed are not made available and the results are not used in a meaningful way ? A lack of a plan for planning. As a consequence, too few managers understand how the plan will be built up, how the results will be used, the contribution that they are expected to make and the time scales that are involved ? A lack of support from line managers www. cthresources. com

Page 68 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Problems of Marketing Planning continuedā€¦ ? A confusion over planning terms – remember that not everyone is familiar with Ansoff and the Directional Policy matrix ? ? Numbers are used instead of written objectives and strategies The emphasis is on too much detail, too far ahead www. cthresources. com Page 69 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Problems of Marketing Planning continuedā€¦ ?

Planning becomes a once-a-year ritual instead of an integral part of the day-to-day management process ? Too little thought or attention is given to the differences between operational or short-term planning and strategic planning ? There is a failure to integrate marketing planning into the overall corporate planning system www. cthresources. com Page 70 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Problems of Marketing Planning continuedā€¦ ? The task of planning is left to a planner who fails to involve those who are actually managing the business ww. cthresources. com Page 71 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Planning and Implementation Matrix (Adapted from Bonoma, 1985) www. cthresources. com Page 72 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission ? The development of a mission statement is the starting point both for corporate and marketing planning, since it represents a vision of what the organisation is or should attempt to become This is typically expressed in terms of the two questions to which we have already referred: ā€˜What business are we in? ā€™ and ā€˜What business should we be in? ā€™ It is the answer to this second question in particular that sets the parameters within which objectives are subsequently established, strategies developed and action programmes implemented www. cthresources. com Page 73 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ The role of the mission statement should be seen in terms of the way in which it is – or should be capable of performing a powerful integrating function, since it is in many ways a statement of core corporate values and is the framework within which individual business units prepare their business plans, something that has led to the corporate mission being referred to as an ā€˜invisible handā€™ that guides geographically scattered employees to work independently and yet collectively towards the organisationā€™s goal ww. cthresources. com Page 74 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ? A similar sentiment has been expressed by Ouchi (1983, p. 74), who suggests that the deliberate generality of the mission statement performs an integrating function of various stakeholders over a long period of time ? This is illustrated in the case of the earth-moving equipment manufacturer J. C.

Bamford, which has a clearly stated policy of quality and product improvement, something of which everyone in the organisation is fully aware and which acts as a consistent guideline in determining behaviour at all levels, but particularly within the planning process www. cthresources. com Page 75 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation The Problems of Marketing Planning continuedā€¦ ? Planning becomes a once-a-year ritual instead of an integral part of the day-to-day management process ?

Too little thought or attention is given to the differences between operational or short-term planning and strategic planning ? ? There is a failure to integrate marketing planning into the overall corporate planning system The task of planning is left to a planner who fails to involve those who are actually managing the business www. cthresources. com Page 76 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ www. cthresources. com Page 77 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ? For a mission statement to be worthwhile, it should be capable of providing personnel throughout the company with a shared sense of opportunity, direction, significance and achievement, factors which are particularly important for large organisations with divisions that are geographically scattered www. cthresources. com Page 78 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Establishing The Corporate Mission Contdā€¦ ? The potential benefits of a strong binding statement of fundamental corporate values and good communication have been highlighted by a variety of writers, including Collins and Porras (1998), who have highlighted the importance of a powerful vision that is then driven throughout the organisation ? Equally, a study of European managers by Management Centre Europe found that what gave highly successful companies an edge over their competitors was the importance they attached to basic corporate values www. cthresources. com Page 79 www. thawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ? In commenting on these findings, Chisnall (1989, pp. 138ā€“9) has said: As with comparable studies in the United States, there often seemed to be a rather curious inverse relationship between those companies which emphasised profitability as a primary corporate value and the actual profitability achieved. On the other hand, companies generally ranking customer satisfaction as the most important corporate value were highly profitable.

It is important to note, however, that professed commitment to high corporate values needs to be translated into practice: strong declarations themselves may sound impressive, but implementation has to be effected by management at every level of organisation and expressed in many ways, such as high standards of customer service, good teamwork between executives in different departments as well as in the same section, keeping promised delivery dates, etc. Clearly, these duties should always be undertaken by those responsible for them but, too often, such everyday tasks are just not well done. ww. cthresources. com Page 80 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ? In many ways, therefore, the mission statement, the position of which within the overall planning process is illustrated by the acronym MOST (Mission, Objectives, Strategy, Tactics), represents a visionary view of the overall strategic posture of an organisation www. cthresources. com Page 81 www. cthawards. com

Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ā€˜It is a generalised statement of the overriding purpose of an organisation. It can be thought of as an expression of its raison detre. Johnson and Scholes (2002, p. 239) Richards (1983, p. 104) has referred to the mission in much the same way, calling it ā€˜the master strategyā€™ and suggesting that it is a visionary projection of the central and overriding concepts on which the organisation is based.

He goes on to suggest that ā€˜it should not focus on what the firm is doing in terms of products and markets currently served, but rather upon the services and utility within the firmā€™ www. cthresources. com Page 82 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ? It follows from this that any failure to agree the mission statement is likely to lead to fundamental problems in determining the strategic direction of the firm Recognising this, the management teams of The Body Shop and easyJet have both concentrated upon developing and communicating to their staff their mission statements ? The rationale in each case is straightforward and is a reflection of the fact that a mission statement is of little value unless it is understood by everyone in the organisation and acted upon www. cthresources. com Page 83 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Establishing The Corporate Mission Contdā€¦ In the case of easyJet, for example, the mission statement is: ā€œ. . . to provide our customers with safe, low-cost, good value, point-to-point air services to offer a consistent and reliable product at fares appealing to leisure and business markets from our bases to a range of domestic and European destinations. To achieve this we will develop our people and establish lasting partnerships with our suppliers. ā€ www. cthresources. om Page 84 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ For The Body Shop, the mission is: ā€œTo dedicate our business to the pursuit of social and environmental change To creatively balance the financial and human needs of our stakeholders, employees, franchisees, customers, suppliers and shareholders To courageously ensure that our business is cologically sustainable, meeting the needs of the present without compromising the future To meaningfully contribute to local, national and international communities in which we trade, by adopting a code of conduct which ensures care, honesty, fairness and respect To passionately campaign for the protection of the environment, human and civil rights and against animal testing within the cosmetics and toiletries industry To tirelessly work to narrow the gap between principle and practice, whilst making fun, passion and care part of our daily livesā€ ww. cthresources. com Page 85 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Establishing The Corporate Mission Contdā€¦ ? For Marks & Spencer, the vision is: ā€œTo be the standard against which all others are measuredā€™” ? The companyā€™s mission is: ā€œTo make aspirational quality accessible to allā€ www. cthresources. com Page 86 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation

Developing the Mission Statement (Adapted from Piercy, 1997) www. cthresources. com Page 87 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Modifying the Mission Statement Overtime ? Having developed a mission statement, it should not be seen as a once-and-for-all expression of the organisationā€™s purpose, but rather as something that changes over time in response to changing internal conditions, and external environmental opportunities and threats ?

A mission statement developed in the 1970s, for example, is unlikely to be appropriate today, when issues such as environmentalism and the green consumer are of considerably greater importance ? Equally, the mission statement needs to reflect changing emphases as the organisation grows, adds new products and moves into new markets www. cthresources. com Page 88 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Modifying the Mission Statement Overtime Contdā€¦ ?

Over the past decade, for example, many of the drinks companies have moved away from the focus upon brewing that dominated for several decades to a far broader focus upon leisure, and in doing this have redefined their mission statements on several occasions www. cthresources. com Page 89 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Influences on the Mission Statement In developing the mission statement for a company, there are likely to be five major factors that need to be taken into account: 1.

The companyā€™s history and in particular its performance and patterns of ownership 2. The preferences, values and expectations of managers, owners and those who have power within the organisationā€˜s strategy can be thought of as a reflection of the attitudes and beliefs of those who have the most influence in the organisation. Whether an organisation is expansionist or more concerned with consolidation, or where the boundaries are drawn for a companyā€™s activities, may say much about the values and attitudes of those who most strongly influence strategy (Johnson and Scholes (1988, p. 7)) www. cthresources. com

Page 90 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Influences on the Mission Statement Contdā€¦ 3. Environmental factors, in particular the major opportunities and threats that exist and are likely to emerge in the future 4. The resources available, since these make certain missions possible and others not 5. Distinctive competences. While opportunities may exist in a particular market, it would not necessarily make sense for an organisation to enter the market if it would not be making the fullest use of its areas of distinctive competence ww. cthresources. com Page 91 www. cthawards. com Learning Outcome 1 ā€“Evaluate the use of strategic plans for a hospitality or tourism organisation Influences on the Mission Statement Contdā€¦ However, for the majority of organisations, the development of a mission statement often proves to be a difficult process, involving a series of decisions on strategic trade-offs between different groups of stakeholders both inside and outside the organisation

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