Strategic Management in Hospitality and Tourism sector
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Published: Wed, 03 May 2017
Strategic management has become a common phenomenon in today’s manufacturing industries and services sectors. Now, with the increasing globalization effect not only the manufacturing industries but also the services sectors have proved success of strategic management. During the recent recession period most of the hoteliers found it difficult to fill all their hotel room. This was not the case with one hotel or a single country, every country was facing the heat of financial meltdown. The level of occupancy rate in every hotel was very low let it be a 5 star hotel or without any star, sill there was difference in the occupancy rate among the hotels within a country. The sector or the industry which has a competitive advantage can attract more customer compare to other. Hospitality and Tourism sectors can also develop core competency for long term sustainable growth.
The competitive advantage is a state where the producer of a service or produce has captured the full marketplace share over its opponent. However, the manufactures are often come in contact with two impasses for the formation of a competitive gain. Firstly the superior industry option has previously gone and the second is that small institution does not have capability to sustain in accordance with bigger firms. But both of these hypotheses are incorrect! On the other hand, the accessible companies, whether they are big or small, do not want competitors (Dess, et. al., 2005). According to Porter (1998), there are two way to develop competitive advantages; differentiation and cost leadership. By developing little advantages and being the average competitor is a stuck in the mid way position. Some other writers argue that the polarized approach like this is very dangerous to pursue. There is evidence that it is possible to achieve Porter’s both types of competitive advantages. Tourism sector and hospitality are one of the industries where both the competitive advantages like improving on cost, reliability, innovation and quality. Its long time now from when manufacturing industries are formulating strategies to achieve competitive advantages. But now the services sectors have also recognized the value of strategic management for achieving competitive advantages. In a services organization the focus remains on organizational resources and skill for developing competitive advantages. The hospitality and tourism sector is one of the same sectors where the competitive advantages can be achieved through formulating an appropriate strategy which can not only improve its resources performance but also helps to develop new skills in its manpower (Bharawaj et. al., 1993). The reduction in the costs of transportation and communication have accelerated the growth of global trade and opening new prospect for world-economy. These decreasing costs help in smoothing the progress of the trade movement of goods, service and also to provide tourism services. The boost in the facility of IT sectors has given rise to contact and expand services throughout the world. Consequently a whole range of services has become easy to transfer and tradable, in the worldwide market. This Global financial incorporation helps in improving the world status and opening new vistas of job opportunity throughout the world (IBM, 2006).
As the competitive edge grows, the market became more adoptable with this regular challenge. It will help the enterprise to focus more on the on growing trends and demand of the business. This method seeks an endlessly record of your competitors and their future plan of action. This situation may be distinguished after passing of certain time period and by the demand of consumers in regard to number of situation. The company must adopt a stretchy behavior so that to survive in a particular situation (www.va-interactive.com). Sustaining the competitive advantages in hospitality and tourism sectors is more difficult than developing a competitive advantage. Sustaining competitive advantages is a continuous process, this process can be divided into two parts the first is to work in the same direction and the second is to develop any other competitive advantage before the time the competitors recognize its competitive advantage and copy them. The comparison of both the processes by their level of difficulty may show that the second process is more difficult than the first one. If the competitors are successful to copy that competitive advantage, it would not remain with the organization for long (Ulwick, 1999). So, it has to improve its competitive advantage continuously for retaining it for long term. Along with that an organization also has to pay proper attention to keep its competitive advantage secure. In hospitality and tourism sector this may be more difficult than creating a new competitive advantage over a period of time. So, an organization needs to develop a new competitive advantage again and again to be ahead among its competitors.
The rising need of strategic management is caused by numerous ongoing processes. The growing contest in every sectors has made the work complicated for competing in those atmosphere. The rises in the latest technology, communication and inexpensive transportation and have given rise to many world-wide business. This technological growth has gather speed in the worldwide financial system (Ulwick, 1999). During, the last 20years people have shown their much attention in deliberate management. A strategy can be formulated on the basis of two behaviors: By making a managerial strategy in order to achieve the short or long – term goals or as an example that appear in a series of result over time and, finally, it’s the basic reason. However, in a number of cases some firms do not have a proper plan according to the fast shifting atmosphere of the word (www. media.wiley.com). The managers however, grab the options as they are getting more aware with the defined procedure made by the organization. In such cases, the planning explains the overview of the policy of the owner of the company, and it becomes even clearer after passing of time. According to Harrison and John (2008), the conventional view of school hold the belief that the managers do retort to such services, that helps in forming decisions which is reliable with a fixed plan. However, it is also said that the plans must be purposeful. This kind of conscious strategy helps the managers to plan according to his proposed strategic route. Yet in dew cases the plan basically comes out from a flow of opinion. Managers do study while they are on work. A developing strategy is said to be one that was not either intended or planned. As per this thought, the executives get an opportunity to learn by the process of doing the work (Harrison and John, 2008).
The process of planning approach, Strategy formulation is generally grouped into three stages like as industry, functional and corporate level strategy. The vital aspects of corporate – level strategy are to describe a company’s activity in a particular field by the assortment of areas where an organization can do its trade in order to contend with other company rival (www. media.wiley.com).
Business – level strategy formulation gives a clear -cut view regarding which area should be given more emphasis for doing businesses in order to get the desired results. The business – level strategies sometimes are also called as competitive strategies. The Functional – level strategies helps in keeping all the information intact with it so that to explain how this practical wealth may be applied to execute company – level planning and to attain spirited benefit in according with the marketing, operations, and finance. On the whole, the efficient – level approach are carried out in order to increasing, obtaining, and administering organizational functions. These features are over cut down, but sometimes they are constructive for the corporate -Level policy where it expresses “how to fight in those areas,” and the practical – areas will be administer so that business objectives may be fulfilled by utilizing other industry planning (Ulwick, 1999). All these three level of strategy can be applied in hospitality and tourism sector, where strategy is formulated for different purposes to compete and prove their presence on local, national and international level. Every level needs a different treatment which has the solution by formulation and implementing strategy of different level for achieving defined aims. Hotel industry is highly dependent on tourism and level of tourism also depends on the quality of the services available in the area, in this way both these sectors are inter dependent and need strategies which can lead them on a path of growth while earning good rate of profit. A good strategic formulation and implementation can save these sectors even in the time of recession or financial crisis like the one the world has recently experienced.
Hotels and tourism business is the fast growing network among the world competitive businesses. The hospitality industry is mainly consisting of businesses that offer their services in providing accommodation, food and beverage, and some kind of blend of these activities. The business of hospitality industries provides such services, which is different from material foodstuffs because they are made for the purpose of immediate consumption (Olsen, et. al., 2008). They also vary from other service in number of ways by providing accommodation for those who are traveling away from home in regard to the local residence, However, restaurants generally provides services for both the travelers from outside and local visitor . Providing an experience also plays an important role in the hospitality section of business. Hence, for expanding the size of the business structures of hospitality industry has increased the world-wide development, such as franchising, asset management, direct ownership by chains, and consortia. In today world the hospitality industry has become more sophisticated and complex in terms of their area of work and movement. The phrase “Travel and tourism” is defined as an extensive word used for the purpose of number of interconnected industry works that supply their hospitality services. Tourism is acknowledge as the biggest unit throughout the world, in fact it is believed to be the second major work provider to the export business and the third biggest to retail sales in the US (Olsen, et. al., 2008). It is also said to be the first, second, or third major employer in 30 out of 50 states. In addition to the conventional form of hospitality trade of hotels and eatery, the tourism sector are also spreading in the areas like diversion firms, travel representative, tour worker, re-creational venture car rental firms and airlines, cruise lines (www.media.wiley.com). The main area of concern in this textbook is to capture those areas of hospitality businesses that are chiefly affianced in offering food, place to stay and traveling facility to their guests.
Schuler and Jackson (2007) has worked to develop a role model between the competitive strategy and HRM, so that to know a link between competitive strategy in order to seek the competitive advantage. The HRM approached was adopted to know where the organization seeks to develop product or services which are different from their competitors. The main focus is given on what the companies are offering in order to prove themselves new and different from others. Organization adopts such approach to develop an environment where innovation is allowed to boost the business. However, the employee seeks the role behavior in such circumstances where there is minimum risk factor involved. The HRM strategy focuses on the quality enhancement strategy wherein firms seek to gain competitive advantage by enhancing the quality of product and services. These approaches once again points to certain HRM practices to provide quality support to the organization. These practices includes the encouragement of feedback system ,decision making , teamwork and taking responsibility which is said to be the integral part of an employee’s job description and flexible job categories. The intent of these practices help in creating a co-operative atmosphere for the attainment of organizational goal (Nickson, 2007).
Change is not any easy process; it need full dedication and co-operation from the human resource department to deal with manpower issues, which may create problems in the path of strategic change (Jackson, 2009). The change in the strategic direction would be initiated by the top management, as in most of the organizations top management is responsible for taking strategic decisions. Any change in the direction of strategic would also be possible after their agreement. Multiple issues can emerge whenever an organization wants to change it strategic position (Pettigrew and Whipp, 1998). The issues can be human, financial, and Infrastructural resources related. Out of all of them the human resources related issues are the most important as the efficiency of the organization will depend on the efficiency of its employees. It is human resource who handles all the activities from decision making to the execution. The common issue which rises due to change in strategic direction is non-acceptance of the decisions by the managers. The managers who are the really people to implement strategies think that the change may affect their performance (Denison, 2001). Moreover, they find it tiring and difficult to persuade their staff to change the process of their work time to time. If the change is related to the process efficiency and automation, operation staff would be ahead of everyone to oppose the decision as the decision will affect their jobs and the organization may cut the jobs later on. The other organizational staff may not find the strategic direction change favorable to their long term employment opportunities (Jackson, 2009). The hospitality and tourism sector can create manpower based competitive advantages, which wouldn’t be possible if it loses it real strength.
An organization can easily deal with these human resources issue by taking some basic step before initiating the change process. The top management would be aware about the process that soon they are going to formulate and implement a new strategic or going to change the strategic direction. The top leadership need to take the manager along with them and make them understood the necessity and importance of change. Once the middle level management would be involved in the formulation process they can easily persuade their subordinates (Jackson, 2009). For taking the front level employees with the process, let supervisors and junior managers to deal with them and take strict actions against them who are not ready to follow the direction (Pettigrew and Whipp, 1998). This is the easiest way to manage change process. The alternative way can be the autocratic approach where all the employees are forced to follow the guidelines of the senior management or they have to face strict actions. Making the employees aware about the need of the change in the strategic process and providing them training to implement the desired change can also win their heart. Once employees understand the importance of change they may take interest in the strategic change process and take the other fellow employees along them who are not ready to participate in the process (Pettigrew and Whipp, 1998). In this way this approach of handling employees issue seem the most suitable where the HR department is efficient and have good relations with employees. Hospitality and tourism sector is completely dependent on the manpower and this method adopts a soft technique to persuade the employees (Denison, 2001), which can work wonders if implemented properly with the sincere efforts.
Implementation of the strategic change is as difficult as to formulate and implement a new strategy. The broad view also shows that change in the strategy is also the implementation of a new strategy, because when an organization evaluate and modify or change the strategy it has to follow the same process which it follow while formulating a new strategy (Jellison, 2006). The first issue that an organization will face would be huge investment of human and financial resources. Strategy formulation and implementation process is a time consuming process which requires lot of man hours (Denison, 2001). Implementation of strategic change may prove to be a financial burden for the organization if it has to replace the technology. Implementation may also require some new skill set for this an organization has to train its employees which may prove a costlier affair for the organization. More than that implementation of strategic change may create confusion among the employees that the organizational leadership is not efficient, when they take their own steps back what will happen if this current strategy would also not work. These doubts in the employees hamper their performance and hence the whole organizational performance (Jellison, 2006). This tendency may result in the high rate of attrition leading to skilled manpower crunch. Hospitality and tourism sector is highly dependent on the manpower and required specially set of skills without efficient manpower it would be very difficult to sustain for any organization. Information technology can also be helpful in the implementation process. If the top management communicate the change process to the each and every level of management the process would become easy to implement. Step-by-step communication keeps the middle and lower level management informed about the decisions that would be taken in the near future (Coghlan and Brannick, 2005). This will help the management to develop mind set for the strategic change since from the initial stage and when the decision is finally approved the easily accept it and follow it.
In the end, it can be concluded that the competitive advantages are very important for every industry and sector. Now with the change in the business models and increase in the globalization, hospitality and tourism sectors also has come under the same umbrella where they need to develop competitive advantages to compete in the service sector. Competitive advantages not only helps an organization to stand ahead than it competitor but also to earn more by providing better cost effective service. Developing competitive advantages in the hospitality and tourism sector is not an easy task, but to sustain those competitive advantages is more difficult than that. There are different ways by which an organization can succeed in developing and sustain its competitive advantage for long term and make them sustainable dynamic competitive advantages. In this process of change human resources play very important role, which is also the most important resource for the hospitality and tourism sectors.
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