Strategic Management: Evolution

• Strategic Management involves defining missions, visions, goals, and executing strategies to achieve a competitive advantage.
• Strategic Management Framework includes internal/external analysis, strategy formation/implementation/control.
• Strategy originates from the Greek word "Strategos," meaning "leader of the army."

Evolution of Strategy

• Sun Tzu (400 BC) focused on calculations, positioning, and preparation.
• Carl von Clausewitz (18th Century) viewed strategy as dynamic and adaptable.
• 1950-1960: Focused on leadership, interpersonal relations, and organizational structure.
  • Utilized a Top-Down Approach, with centralized decision-making.
• 1970-1980: Strategy formulation and corporate strategy concepts emerged.
• 1980s witnessed a shift from leadership to organizational culture.
  • The Resource-Based View (RBV) emphasized firms' competencies.
• 1990s marked the rise of Globalization and Network Strategies.
• 2000s introduced the Co-alignment Concept and environmental scanning.

Three Levels of Strategy

• Corporate Level defines business scope, expansion, and resource allocation.
• Business Level determines how to compete (cost leadership, differentiation, or focus strategies).
• Functional Level focuses on efficiency, innovation, and customer satisfaction.

Hospitality and Tourism

• Hospitality involves the reception and entertainment of guests.
  • Encompasses lodging, food, beverage services, and event planning.
• Tourism includes activities of people traveling outside their usual environment for leisure or business.
  • Plays a crucial role in economic development by generating revenue and jobs.

Global Economic Impact

• Contribution to Global GDP: Accounts for 10% of global GDP.
  • In 2019, the industry contributed $9.2 trillion.
• Job Creation: Offers diverse opportunities, from entry-level to high-level management.
• Foreign Exchange Earning: Balances trade deficits through international visitor revenue.
• Infrastructure Development: Investments in hotels, airports, and transportation improve infrastructure.
• Support for Local Businesses: Boosts demand for local products and cultural experiences.
• Sustainable Economic Growth: Promotes long-term economic and environmental balance.

Challenges Faced

• Economic dependency: over-reliance makes economies vulnerable to crises.
• Seasonality: Tourism destinations experience seasonal fluctuations.
• Over-tourism: Popular destinations struggle with overcrowding and damage.

Types of H&T Industry

• Travel and Transport: Airlines, cruise lines, car rentals, and railways.
• Accommodation: Hotels, motels, guest houses, and time-shares.
• Food and Beverages: Restaurants, cafes, bars, and catering.
• Entertainment and Recreation: Theme parks, casinos, resorts and management companies
• Tourism Offices/DMO: Government tourism boards, regional offices and agencies.
• Non-Governmental Tourism Organizations: Associations, bureaus, and conservation groups.

Classification

• Small Enterprises: Owner-managed businesses like boutique hotels.
• Medium Enterprises: Regional hotel chains and independent agencies.
• Large Enterprises: Multinational hotel chains and global fast-food brands.
• Profit Organizations: Motivated by financial objectives, market expansion, and satisfaction.
• Non-profit Organizations: Focus on sustainable tourism development

By Geographical Coverage

• Local Organizations operate within a single city or country.
• Regional Organizations function across a specific region.
• Global Organizations operate worldwide, managing properties or services across countries.

Characteristics of H&T Organizations

• Inseparability: Customer participation in the service process.
• Simultaneity: Production and consumption occur at the same time.
• Perishability: Services cannot be stored.
• Intangibility: Combination of tangible and intangible elements.
• Heterogeneity: Services vary based on employee performance.
• Cost Structure includes both high fixed and operating costs.
• Labor Intensive: Dependence on human resources.

Managing H&T Organizations

• Requires ongoing internal and external environmental analysis due to seasonality and economic conditions.
• Decision-making considers perishability, using dynamic pricing to maximize revenue.
• Strategic planning is necessary for sustainable growth.
• Developing a Sustainable Competitive Advantage - differentiates H&T businesses.
• Achieving and Evaluating Intended Outcomes: Requires real-time quality control.
• Managing Capacity to Maximize Revenue: Effective demand forecasting.
• Managing Cost Structure: Strategic financial planning.
• Allocating Financial and Human Resources is critical for future strategies.
• Evaluating and Improving the Service Delivery Process enhances experiences.
• Interacting with and Satisfying Customers drives customer loyalty.
• Training and Motivating Employees is crucial because the sector is labor-intensive.
• Facility Design and Décor influences customer perceptions.

Role of Strategic Management in H&T Organizations

• Linking external and internal environments.
• Defining organizational vision and purpose.
• Enhancing decision-making and resource allocation.
• Managing change and complexity.
• Creating a sustainable competitive advantage.
• Measuring strategic success.

Industry vs. Organizational Context

• "Outside-In" Perspective: Emphasizes the external industry environment.
• "Inside-Out" Perspective: Internal capabilities determine success.

Adapting Management Theories

• Understanding the external industry environment through analysis.
• Leveraging internal organizational capabilities to develop unique offerings.
• Balancing standardization and customization.
• Managing strategic resources and costs.
• Emphasizing Experience-Based Strategies by recognizing the shift to memorable customer experiences.

Internal and External Influences

• Businesses operate in both internal and external environments.
• The external environment includes factors that impact the business.
• Changes in the external environment present opportunities or threats.

Internal Environment Components

• This includes the human resources, organizational functions, and organizational level.

External Environment Forces

• Macro Environment: Political, economic, social, technological, ecological forces (PESTEL).
• Micro Environment: Customers, competitors, suppliers, and industry trends.

Importance

• Environmental scanning identifies trends, helps proactive responses, and improves decision-making.

SWOT Analysis Role

• Strengths (Internal capabilities)
• Weaknesses (Internal limitations)
• Opportunities (External favorable trends)
• Threats (External risks and challenges)

Environmental Characteristics

• Environmental Volatility: Rate of change in the external environment.
• Environmental Munificence: Availability of resources and opportunities.
• Illiberality: Opposite of munificence.
• Environmental Dynamism: Degree of change in key factors.
• Environmental Hostility: Unfavorable conditions in the general environment.
• Market Hostility: Unfavorable conditions in the task environment.
• Environmental Turbulence: Amount of change and complexity in external environments.

Environment Dimensions

• Simple-Complex Dimension: Number of influencing factors.
• Static-Dynamic Dimension: Degree of change over time.

Environment Types

• General Environment (Macro): Broad external factors.
• Task Environment (Business): Immediate and industry-specific factors.
• Industry Environment: Subset of task environment focusing on industry structure.
• Firm Environment (Internal): Internal operations and resources.

Macro Environment

• This influences customers and stakeholders.

PESTEL Factors

• Political/Legal Environment: Government policies and regulations.
  • Key factors include regulatory and trade policies, political stability, and compliance.
• Economic Environment: Economic conditions.
  • Key indicators include GDP growth, interest rates, and unemployment.
• Sociocultural Environment: Social and demographic trends.
  • Key factors include demographics, cultural shifts, and lifestyle trends.
• Technological Environment: Innovation and market expansion.
• Ecological Environment: Environmental concerns.
  • Key issues include sustainability, climate change, and waste management.