Strategy o Plan Strategy

▪ Long term strategy

- Greek word “STRATEGOS”
▪ Progress is monitored
o “LEADERS OF THE ARMY”
o Ploy Strategy
- About making you think ahead
▪ Short term strategy
- the determination of the basic long-
▪ Detailed tactical action
term goals and objectives of an
▪ A maneuver intended to
enterprise, and the adoption of
outwit an opponent or
courses of action and the allocation
competitor
of resources necessary for carrying out
o Pattern Strategy
these goals.
▪ Adopting a consistent form
o Definition of Prof. Chandler of
of behavior
Harvard Business School in 1962
o Position Strategy
- Elements of Strategy
▪ Where you sit on the
o Determination of the basic long-
playing field
term goals and objectives
o Perspective Strategy
▪ Conceptualization of
▪ Companies want to make
coherent and attainable
their employees think in a
strategic objectives
certain way
o Adoption of courses of action
▪ Changing the culture of a
▪ Actions taken to arrive at
certain group of people
objectives
o The Allocation of resources Level of Strategic Decisions
▪ Cost associated with the
actions required - Strategic Level Decisions
o Made by senior managers
Resources o Sustainable competitive
advantage
- Resource inputs (factors of production)
o Affect the whole organization
o Essential to the normal
o Managers require multi-
functioning
conceptual skills
- Four Key Categories
▪ Ability to consider the
o Financial Resources
effects of multiple internal
▪ Money
and external influences
▪ Shareholders, banks,
- Tactical Level
bondholders, etc.
o Have effects only in parts
o Human Resources
o Made by the head of the dep.
▪ workforce
o are concerned with how strategic
▪ Skilled employees
level objectives are to be met and
o Physical Resources
how strategies are implemented
▪ Tangible resources
- Operational Level
▪ Land, buildings, plant,
o Day-to-day management
equipment, stock for
o Made by junior managerial or
production, transport
supervisory level
equipment, etc.
o Intellectual Resources Hierarchical Congruence
▪ Intangible resources
▪ Cannot be seen or felt - The tactical and operational decisions
must “fit” the strategic objectives
Strategic Management
Mission, vision and values
- Giving concepts, frameworks, tools and
techniques - Manifestations of an org. identity
- Develop a framework for thinking ahead - Personality
– aim Mission
Mintzberg’s Five Ps - What the organization does
- Proposed by Prof. Henry Mintzberg of - The critical first step in planning is the
McGill University in Montreal, Canada definition of an organizational mission
- A strategy can be a: (Powers, 2012)
Mission Statement ▪ Businesses exist primarily
for their owners
- Articulates the fundamental purpose of
▪ They invest money
the organization
▪ Stockholders
Vision • Those who own at
least one share of
- What the company would like to achieve
the company stocks
Values o Stakeholder Approach
▪ Can affect or is affected by
- How managers and employees conduct the achievement of an org.
themselves objectives
- Powerful vision look like: ▪ Stakeholder
o Conciseness • Legitimate interest
▪ Easy to communicate and in the organization’s
remember activities
o Clarity
• Investors,
▪ Direct to the point
employees,
o Future Orientation
suppliers,
▪ Do not consist one time
customers, trade
o Stability
associations,
▪ Flexible enough to
communities, and
weather fluctuations
government.
o Challenge
▪ Motivates staff to try their UNWTO
best
- United Nations World Tourism
Objectives Organization
- Define tourism as it entails movement of
- Essential to the successful
people
accomplishment of the managerial
function Goods
- Types of Objectives:
- tangible
o Closed
- Raw materials
▪ Quantitative terms
- Things you can own
▪ Specific in form
o Open Services
▪ Qualitative terms
▪ General in form - Things done on your behalf
- Corporate Objectives - You have use of them
o Translate the mission and vision - Intangible
into specific long-term targets - Characteristics of Service
- Objective writing is a C-R-I-M-E o Intangibility
o C-communicable ▪ Services cannot normally
▪ Easily communicated be seen
o R-realistic ▪ you cannot test them, but
▪ Achieved within the easier to distribute
timescale ▪ enables potential customer
o I-internally consistent to gain access to the
▪ Consistent with the overall product
org. mission o Inseparability
o M-measurable ▪ production and
▪ Capable of being consumption of services
quantified/measured ▪ great emphasis on the
o E-explicit importance of front-line
▪ Clear and unambiguous staff
language ▪ Service Factor
- Set by org. senior management • the consumers of
o Stockholder Approach the service have
direct experience of
 the production of 3. Ease of Entry or Exit
that service. a. Relatively easy to set up in
▪ Package business or indeed to exit from
• Pre-arranged the industry
combination, sold or 4. Interdependence
offered for sale at a. sectors are all linked and depend
an inclusive price upon one another
o Transport b. Components Sectors of
o Accommodat Tourism and Hospitality
ion i. Lodging
o Other tourist ii. Entertainment and
services Recreation
o Perishability iii. Food and Beverages
▪ Important to manager as iv. Travel and Tourism
the production and c. Tourism Supply Chain
consumption are - network of tourism
simultaneous organizations engaged in
▪ Demand can fluctuate for different activities ranging from
all sorts of reasons; the supply of different
Supply, however, is often components of tourism
much more difficult to products/services
alter, at least in the short - Sectors and Sub-Sectors of
term. Tourism, Hospitality
o Heterogeneity
▪ Never identical
▪ Standardization of
procedures
o Ownership
▪ Customers use services
rather than own them
▪ Buying only access to or
use of something
▪ Loyalty Schemes
• the frequent flyer
programmes
operated by many
airlines and
frequent guest
programmes
operated by hotel
5. Impact on Society
examples
a. can be classified as economic,
Characteristics of Tourism and Hospitality social and environmental and
classified into positive and
1. High Cost
negative impacts.
a. provide product features of a
b. Mass Tourism
consistent quality
i. phenomenon of largescale
b. Potential customers will want
packaging of standardize
reassurance about the reliability
leisure services at fixed
of the product, the value for
prices for sale to a mass
money the purchase represents,
clientele
and the quality and value
provided
2. Seasonality
a. Seasonal demands
b. Demand for the product is largely
related to climate but is also
related to factors
 - Input employed in the activities
o Human
o Financial
o Physical
o Operational
o Intangible
Competence
- Attributes possessed by all or most of
the organizations
Core Competence
- Attributes specific to a particular
organization
Competitive Advantage
6. The Effect of External Shocks
a. Internal Shocks - Overall purpose of the strategy
i. assessed and controlled - Able to return higher profits than its
by managers competitors
ii. Corporate: Financial How Core Competencies Work
irregularity, management
that is too ambitious,
fraudulent and
incompetent
b. External Shocks
i. have a dramatic and
speedy effect upon levels
of business
ii. wars, hurricanes, terrorist - Core competence (distinctive capability)
when applied in a market creates value
attacks, pollution, adverse
for customers – this represents
publicity or accident competitive advantage.
c. What To Do?
i. Identify the risk Resource Analysis
ii. Assess the possible - Resources
impact o The inputs or assets that enable
iii. Have contingency plans in an organization to carry out its
place activities
o Tangible Resources
Strategic Process
▪ Obtained from outside the
organizations
o Intangible Resources
▪ Developed within an
organization
o Free Resources
▪ Available in such
abundance naturally
Particular challenges in the use of
resources
1. Resource Immobility
Purpose of Internal Analysis a. Resources cannot be moved
2. Resource Substitution
- Internal Analysis a. Difficult to substitute one
o Concerned with providing the resource category with those of
management of organizations another
with a detailed understanding 3. Resource Conflict and Competition
a. Makes extensive demands
Resource
4. Resource Ownership and Control
 a. Lack of ownership and control of i. Comparisons with
resources Industry Norms
b. Public-Private Partnerships - Accepted as exemplary
i. Arrangement between ii. Comparisons with
NGO and Private Competitors
Companies - Closest competitors in
5. Seasonality
its strategic grouping
a. Prices to pay vary according to
the season iii. Comparisons with
6. Low Rewards Companies
a. Work for lower wages - Other service-based
7. Capacity Constraints industries
a. The capacity of resources is often
Competencies
constrained
8. Time - potential to be developed into core
a. Travel time may viewed as competencies
burden - developed internally, but may also be
Framework in Analyzing Resources acquired externally

1. By Category Core Competencies

- Evaluated quantitatively (how
- unique to the company
much/many) and qualitatively (how
effective) - superior to the industry average
a. Physical Resources and - Four Sources of Core Competencies
Operational Resources o According to Kay (1995),
i. Typically audited distinctive capability can develop
b. Financial Resources from four sources
i. Considered in terms of 1. Architecture
balance - Network of relationships within
c. Human Resources or around organizations
i. Considered in terms of a. Internal Architecture
background and i. Among employees
productivity
b. External Architecture
d. Intangible Resources
i. Among suppliers and
i. Overall value to the
organization customers
2. By Specificity c. Networks
a. Specific Resources i. Among group of
i. Specialized and industry- organizations
specific knowledge and 2. Reputation
skills - Built over several years
b. Non-Specific Resources 3. Strategic Assets
i. More flexible and for basis - Strength of market position
of competencies based upon possession of
3. By Performance strategic assets
- contribute to internal and external
4. Innovation
measures of performance.
- Providing distinctive product
a. Internal Measures
i. Business Objectives and and/or reducing costs but
Targets sometimes copied
- financial, performance Analysis of Value-Adding Activities
and output measures
ii. Historical Comparisons - Value added can be increased in two
- Performance overtime ways. It can be increased by:
iii. Business Unit or 1. changing customer perceptions of
Divisional Comparisons the product so that they are willing to
- comparisons with other pay a higher price than for similar
parts of the same products produced by other
organization. businesses; or
b. External Measures 2. reducing operating costs below
those of competitors
 - The Value Adding Process o Tangibles
o Value of the products or ▪ Appearance of physical
services is equivalent to the facilities, equipment,
price that a customer is willing to personnel, and
pay for them. communication materials
o Empathy
Value Chain
▪ Caring, individualized
- Primary Activities attention
o Directly add value to the final o Reliability
product ▪ Ability to perform the
- Support Activities promised service
o Do not directly add value dependably and accurately
themselves
Gap in Service Quality
- Analysis of the Value Chain
o helps to identify where the most 1. Management does not know what
value is added and where there is guests expect.
potential to add greater value 2. Management is not willing or able to put
the systems in place to match or exceed
Service Profit Chain
customer expectations –service–quality
- emphasizes the following three factors standards are not developed.
as key drivers of profitability and 3. The service–performance gap – when
revenue growth employees are unable and/or unwilling
o the roles of employees internally to perform the service at the desired
to the organization; level.
o the way in which services are 4. When promises do not match delivery.
delivered; and Effective Strategy
o the targeting of marketing to
customers‟ needs - Mill (2011) suggests that a sequential
five-step approach should be adopted
Service Dominant Logic
which address the four gaps
- Emphasizes service over goods. 1. Identify whether or not a problem exists.
o Intangible rather than tangible 2. Manage customer expectations so they
resources are realistic with the service offering.
o Co-creation of value rather than (Gap 4)
embedded value 3. Identify customer needs and
o Relationships rather than expectations of quality service. (Gap 1)
transactions 4. Develop service quality standards based
on customer expectations. (Gap 2)
Tourism and Hospitality Industry 5. Re-evaluate the human resource
- Labour-Intensive Service Sector system to hire, train and motivate
employees who are willing and able to
Moment of Truth deliver quality service. (Gap 3)
- When the employee interacts with the Human Resource Audit
guest/customer
- Investigation into the skills, size,
The Virtuous Circle structure and all other issues
- linking human resources with business - Audit
success o Reviews the ability of the human
resources
Five Dimension of Service
Human Resource Gaps
- according to Zeithaml et al. (1990)
o Responsiveness - Gap
▪ Willingness to help o Rests upon a simple calculation
customers
o Assurance
▪ ability to convey trust and
confidence
 - closed by using the “five Rs” o Power Structures
individually or in combination. ▪ most powerful
o Retirement; management groupings in
o Retraining; the organization.
o Redeployment;
Cultural Typologies
o Redundancy;
o Recruitment - produced by Miles and Snow (1978)
1. Defenders
The Outcomes of a Human Resource Audit
a. Seek competitive advantage
1. Measures the Problem 2. Prospectors
a. can be measured in numerical a. Enjoy the challenge of developing
terms and introducing new products
2. Human Resource Benchmarking 3. Analyzers
a. comparing a feature of one a. Followers and conservative in
organization nature
3. Identifying human Resources as 4. Reactors
Critical Success Factors a. Tend to follow rather than
a. Critical Success Factors innovate
(CSFs).
Hofstede’s Cultural Dimensions
i. one or more reasons why
superior performers in an - Proposed by Professor Geert Hofstede
industry are in the o Influential Dutch researcher
positions that they are o There are important national and
regional cultural groups
Culture
- Power Distance
- organizational equivalent of a human’s o Inequalities are less acceptable
personality. - Individualism or Collectivism
o Countries are collections of
Organizational Culture
individuals or are bound together
- culture of any group of people is that set as a cohesive whole
of beliefs, customs, practices, and ways - Masculinity vs Femininity
of thinking o Spectrum from masculinity to
femininity
Cultural Web o Male Cultures
- schematic representation of the ▪ Expected to emphasize
elements of an organization’s culture work, power, and wealth
o Female Cultures
Paradigm ▪ More equality
- a way of looking at the world - Uncertainty Avoidance
o Stories o Feel threatened by the unknown
▪ narratives that people o Weak Uncertainty Avoidance
within the organization talk ▪ willing to embrace
to each other about uncertainty and
o Routines and Rituals ambiguous situations
▪ Procedures for doing o Strong Uncertainty Avoidance
things within the ▪ appear to need certainty,
organization planning and order.
▪ “the way things are done” - Long-termism vs Short-termism
o Symbols o Different cultures have different
▪ Symbolize something to time horizons
some people o Long-terminism
o Organizational Structures ▪ Taking a long view
▪ can mean more than just o Short-terminism
those formal relationships ▪ Quick results
o Control Systems Finance
▪ activities are controlled,
whether “tight” or “loose” - Management of money
Financial Management between the decision to
invest and the available
- Managing this scarce resource to
asset.
ensure that finance is:
o Asset Ownership or
o available in sufficient quantities at
Management
the right time;
▪ they manage or lease the
o obtained at the lowest possible
assets
cost;
o used in the most profitable ways Sources of Corporate Funding
- Backbone of any business
1. Capital
- Key Element on Organization’s
a. Money used to invest in business
annual accounts
2. Share Capital
o Balance Sheet
a. Permanent – it is not paid back
▪ Financial statement
by the company
▪ Reports a company’s
b. A sizeable proportion of capital is
assets, liabilities, and
raised from shareholders
shareholder equity
3. Right Issue Capital
o Profit and Loss Statement
a. Seek to increase its capital for
▪ Financial report
expansion
▪ Shows how much your
b. Allowing existing shareholders to
business has spent and
buy new shares
earned
4. Retained Profit as a Source of Capital
Cash Management a. Shareholders provide other funds
for development
- Process of managing cash inflows and
b. Retained Profit
outflows
i. element of operating profit
- Cash Surpluses not paid to shareholders
o Cash that exceeds the cash 5. Loan Capital
required for day-to-day a. Debt capital
operations b. Business raises by taking out a
Cash Flow Risk Analysis loan

- Important strategic task that can provide Financial Analysis

a lot of information on how the company - Three Key Areas of Financial
is trading at the time and indicate likely Analysis
future problems. o Longitudinal analysis
Managing Foreign Exchange Risk ▪ Comparison of data for
two or more years
- The rate of exchange between most ▪ Historical trends
currencies varies, as the rate is set by o Cross-sectional analysis
the vast international foreign exchange ▪ Compare companies
markets, a risk is created. o Ratio Analysis
- The risk is basically that planned ▪ Comparison (by quotient)
revenues are lower and costs are higher of two items from the
than expected when converted into the same set of accounts
company’s home currency ▪ Categories of Ratio
Capital Intensity Analysis
• Performance
- amount of capital used in businesses Ratios
- Three important implications of o how well a
Capital Intensity for Managers: company has
o Barrier to Competition turned its
▪ Capital intensity can often inputs into
act as a barrier profits
o Long Lead Times • Efficiency Ratios
▪ Projects requiring large o how
amounts of capital often efficiently a
have very long lead times
 company has ▪ Age, gender, income, etc.
used its o Geographics
assets ▪ Location, region, climate
• Liquidity Ratios o Psychographics
o test the ▪ Lifestyle, values, interests
company’s o Behavioral
ability to ▪ Buying behavior, product
meet its usage, etc.
short-term - Market Targeting
debts o Selecting one or more of the
• Investor’s Ratios identified market segments
o test for - Market Positioning
aspects of a o Competitive A
company’s ▪ Premium position
performance • High-quality/ high
• Financial price
Structure Ratios o Competitive B
o company ▪ Average-quality at average
‘mixes’ these price
forms of o Competitive C
capital ▪ Budget position
• Low-quality at a low
Market
price
- group of actual or potential customers o Competitive D
o demand side ▪ Value-for-money position
▪ buyers or consumers • High-quality at a
o supply side low price
▪ produces or operates o Competitive E
products ▪ Cowboy position
- Ways in defining Market • Low-quality at a
o Based on product high price
o Based on need satisfaction or
Products
function performed
o Based on customer identity - be offered to a market for attention,
- Importance of Market acquisition or consumption (Kotler and
o It gives managers an indication of Keller, 2012:347)
the demand and potential - Product Life Cycle
demand for an organization’s o Framework that helps businesses
products and services; understands and manages the
o It allows managers to assess the typical stages that a product goes
potential for market growth and through
gain market share over o Introduction Stage
competitors; ▪ initial stage
o It enables managers to recognize ▪ product introduction to the
and evaluate the number, type, market
and capabilities of competitors; ▪ promotion efforts are
o It enables managers to position focused
products and services in the o Growth Stage
market so that they are able to ▪ Sales increase and new
develop and sustain their competitors typically enter
competitive advantage. o Maturity Stage
▪ Have loyal customers
Kotler and Keller (2012:56)
▪ Longest stage
- Market Segmentation o Decline Stage
o Dividing market into distinct ▪ Be ready with strategies to
groups extend the life cycle
o Demographics ▪ New product development