Strategic Planning and Trouble Shooting PDF

Chapter III : STRATEGIC PLANNING AND TROUBLE SHOOTING BA 28 – ORGANIZATIONS MANAGEMENT IN TOURISM AND HOSPITALITY INDUSTRY Sheila B. Baquiran Associate Professor I [email protected]  Objectives At the end of the unit the student must have: 1. Explained t...

Chapter III : STRATEGIC PLANNING AND TROUBLE SHOOTING BA 28 – ORGANIZATIONS MANAGEMENT IN TOURISM AND HOSPITALITY INDUSTRY Sheila B. Baquiran Associate Professor I [email protected]  Objectives At the end of the unit the student must have: 1. Explained the different management and supervision concepts in hospitality operations; and 2. Identified the managerial responsibilities in tourism and hospitality- related businesses. “A business that operates without a plan is like a ship that sails in the ocean without a compass” Environmental Scanning  External Analysis Market Analysis – designed to explore the potential market (income, occupation, spending habits, budget, food and accommodation preferences, needs & requirements). Location may determine possible patrons. Data gathered serve as basis in designing the package of products and services. Potential Threats Business Opportunities Competitors Developments Location Government Support Cost of rental Attractions Availability of raw materials Events Political tension Economic recession  Internal Analysis Strengths of the Organization Weaknesses of the Business Strategic location Insufficient Facilities; Poor New and Elegant Facilities ambience Impressive Ambience Poor customer satisfaction International connections and Incompetent manpower networking Lack of promotions or Varying products publicity Has established popularity and Prices are not competitive reputation Poor location Competitive prices CORPORATE STRATEGIC PLANNING  Corporate Planning – is an attempt to establish the direction of the company, stating in specific terms its vision for the future, corporate goals, core values, strategies and action plans. - The planning activity also includes efforts to identify the progress of the company against its goals, the causes of deficiencies and the performance gaps. - There may be a need to realign plans and strategies to bridge the performance gaps. STEPS IN CORPORATE PLANNING 1. State the Corporate Vision 2. State the company’s Core Values 3. Establish Corporate goals and Objectives in quantifiable terms “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” —Jack Welch, former CEO of General Electric Google’s mission is to organize the world’s information and make it universally accessible and useful (Edwards, 2012). Google expands on its mission by listing “Ten things we know,” including “Focus on the user and all else will follow,” “It’s best to do one thing really, really well,” and “Fast is better than slow” (Google Inc., 2014). The Corporate Vision It is what the company stands for, its vision for the future, its distinctive assets or qualities and the image that it wants to project Example: The Vision of the ABC Company: To be one of the leading canteen concessionaires, known for quality foods and healthy options, affordable prices and efficient and personalized service. The Core Values It is what it considers important in realizing its vision and goals Example: As a food chain aiming to make a name in the food business, we place high value on: Customer satisfaction – value for money Viability and Profitability Quality of foods and services The Corporate Goals and Objectives in quantifiable terms These goals must be directed towards actualizing the core values of the company. Example: (Meant to address the core values) a. Maintain a profitable business with sales of not less than P___ / month. b. Regulate cost by keeping expenses within the budget and by complying consistently with cost control policies.  “Without goals or targets, one will not know where he is going and how well he is doing”. SETTING PERFORMANCE Opening a viable and profitable food business starts with an TARGETS identification of specific, measurable and realistic sales forecast also known as sales projection. Thi s Photo by Unknown Author i s l icensed under CC BY  ADVANTAGES OF A SALES FORECAST 1. It is an important tool for decision-making 2. It serves as parameter for assessing the progress of business. 3. It is a motivating tool.  Forecasting is a strategic tool for analyzing past trends in order to make predictions about future demand based on a variety of factors. The aim is to optimize occupancy and create the most appealing prices so that you can boost your revenue streams and design a profitable business model for the company.  Income from rooms can also be projected using the same principle in calculating food sales. But instead of covers, one must take into account the ff: Room rate FORECASTING Number of rooms per classification ROOMS Projected occupancy based on certain assumptions REVENUE For a starting hotel, the first step is to generate the maximum sales that can be earned by all rooms with their given room rate. Get sales per day and per month using an average of 30days a month. MMSU HOTEL ROOM SALESFORECAST AT VARYING LEVELS OF OCCUPANCY RACK RATE NO. OF ROOMS GROSS SALES/DAY GROSS SALES/MO. STD.TWIN P1,800.00 9 P16,200.00 P486,000.00 STD. DBL P1,800.00 10 P18,000.00 P540,000.00 DELUXE TWIN P2,800 10 P28,000.00 P840,000.00 DELUXE DBL P2,800.00 10 P28,000.00 P840,000.00 FAMILY DELUXE P3,500.00 3 P10,500.00 P315,000.00 SUITE P5,000.00 3 P15,000.00 P450,000.00 45 P115,700.00 P3,471,000.00 MONTHLY PROJECTION Projected Occ. Projected Sales Less Discount (10%) Net Sales January 80% P2,776,800.00 P277,680.00 P2,499,120.00 February 100% P3,471,000.00 P347,100.00 P3,123,900.00 March 70% P2,429,700.00 P242,970.00 P2,186,730.00 April 50% P1,735,500.00 P173,550.00 P1,561,950.00 May 60% P2,082,600.00 P208,260.00 P1,874,340.00 June 50% P1,735,500.00 P173,550.00 P1,561,950.00  The Sales Forecast for F&B Operations should include: FORECASTING FOOD AND Gross Sales (Food Sales & Beverage Sales) BEVERAGE SALES Average check Covers (number of Patrons) MECHANICS OF SALES FORECASTING For Existing Food Outlets A revenue forecast is developed by making reliable assumptions based on: 1. Reliable data (sales records of the previous years) 2. Your knowledge of: Sales History –past revenue levels Potential price changes New competitors Facility renovations, and Improved selling programs Economic variables Political tensions and other external threats These are just a few of the many factors that you must consider when predicting future sales.  Procedures in Sales Forecasting A “cover” refers to servings consumed per customers. The consumption of one “dine-in” customer is equivalent to one cover. The Average check is the 2. Enter the average amount of consumption 1. Get a record of 3. Compute for the of one customer. It is computed projected increase as: monthly revenue, sales forecast using in covers and covers and the formula: average check Average check = Total sales average check for Sales = Number of covers X based on reliable Average check Total covers the past year. assumptions. The average check is expected to increase when menu prices increase and when servers exert more efforts in menu merchandising  Established for a coffee shop with a seating capacity of 100, serving breakfast, lunch and dinner 2024 Forecast is based on the following assumptions: 1. There is an expected 50% increase of patronage in the month of February because the restaurant will come out w/ special promotions on Valentine’s Day(Feb) For Nov. 2024, the projected increase in covers is 40%. By Dec., a 50% increase in covers is expected. All the rest of the months will expect 15 increase in covers. 2. By year 2024, all menu prices will increase by 10% and this will trigger an increase of 10% in Average check. Other months(peak season) can have more than 10% increase in Average check.  ACTUAL SALES 2023 FORECAST 2024 ACTUAL AVE. SALES COVERS AVE. CHECK SALES COVERS CHECK (IN PESOS) (IN PESOS) (IN PESOS) (IN PESOS) MONTH QTY. AMT. IN PESOS % QTY. % AMT. IN PESOS INCREASE INCREASE 1 3 4 5 6 7 8 9 10 Jan. 2790 160.00 P446,400 10% 3069 30% P208 P638,352 Feb. 4200 190.00 798,000 50% 6300 30% 247 1,556,100 Mar. 4650 185.00 860,250 40% 6510 20% 222 1,445,220 April 4500 180.00 810,000 30% 5850 20% 216 1,293,600 May 2790 170.00 474,300 30% 3627 20% 204 739,908 June 2700 165.00 445,500 10% 2970 10% 182 540, 540 July 2790 160.00 446,400 10% 2970 10% 176 522,720 Aug. 2883 167.00 481,461 20% 3460 10% 184 636,640 Sept. 4500 175.00 787,500 20% 5400 20% 210 1,134,000 Oct. 5580 178.00 993,240 30% 7254 30% 231 1,675,674 Nov. 7200 180.00 1,296,000 40% 10080 30% 234 2,358,720 Dec. 8370 190.00 1,590,300 50% 12,555 30% 247 3,101,085 TOTAL 52,953 P9,429,351 70,045 P2,561 P15,612,559 For New Outlets If the food outlet is just about to begin its operations and there are no sales records, one can make projections based on: Assumed number of diners(covers) per month multiplied by the assumed average check The projected number of covers depends on the seating capacity of the restaurant and the turnover rate. Turnover rate- refers to the ratio of occupied seats over the total seats available Ex.: Seating capacity: 100, Guests dined-in: 120 120/100 = 1.2 For outlets that are about to open, the maximum turn-over rate maybe estimated at 1.50 or 2.00 times the seating capacity. A turn-over rate of 1.00 means all seats(100%) are taken in one meal period. If all the seats are occupied twice in one meal period, the turn-over rate is 2.00(200%) In some cases, the turnover rate is 1.5 which means the seats are full for the first round and half full in the second round. For restaurants w/ low patronage, the turnover rate can be as low as.30 or.50 which means only 30% to 50% of the seats are occupied in one meal period. Assuming a restaurant has a seating capacity of 100, and the turnover rate is 1.50, the maximum covers will be computed as: 1.50 X 100 = 150 covers in one meal period If there are 3 meals a day(breakfast, lunch and dinner), the quantity of covers can be estimated as: 150 covers X 3 meals = 450 estimated covers a day If the restaurant will have a maximum turnover rate of 2.00 or 200%, the maximum covers that a restaurant can sell will be: 100 X 2 = 200 covers in one meal period and 600 covers for 3 meals in a day(200X3) Steps to arrive at a sales forecast for new food outlets 1. Determine the maximum 2. Make assumptions for 3. To get projected sales, sales at full house capacity, the ratio(%) of diners from multiply projected covers by maximum turnover. the total maximum covers. the average check Get data on the seating Multiply maximum Example: capacity, expected rate covers/month ( 600 x 31 of turnover per meal days) by the estimated period and average turnover rate. check January sales = 5,580 Get the total covers for covers X P166.66 all meals Assuming that upon start (average check) Get the Average check In the given of the restaurant in = P 929, 963.00 example, the January, the turnover projected sales in a rate is only.30 (meaning To get the projected month are only 30% of the maximum sales, multiply computed as: maximum covers by the maximum covers are average check. = 600 covers x 30 expected) then the days x P166.66 projected covers will be: (average check) = P2,999,880 or roughly.30 (turnover rate) X P3,000,000.00 in a 18,600 = 5,580 covers for month(if there are January 30 days)  Assuming a restaurant serves breakfast, lunch and dinner, no snacks and the maximum turnover and sales BREAKFAST LUNCH DINNER TOTAL 1. Determine the maximum DAILY SALES sales at full Seating capacity 100 100 100 house Maximum turnover 2 2 2 capacity, maximum Daily covers 200 200 200 600 turnover. Sales P30,000 P35,000 P35,000 P100,000 Average check P150.00 P175.00 P175.00 P500.00 MONTHLY SALES Covers 600 covers x 30days (mos. w./ 30days) 18,000 600 covers x31 days (mos. w./ 31days) 18,600 Ave. check Sales = P100,000 / 600 covers P166.66 Monthly sales = P100,000 x 30 days(30) P3,000,000 = P100,000x31 (31) P3,100,000  2. Make Do this for each month, illustrative example can be found in the table below: assumptions for the ratio(%) of Projected Maximum covers(600 Projected covers Average check in Sales diners from the turnover covers/day X no. of days ratio in a mo.) pesos (covers X Ave. total maximum covers. check) 3. To get Jan. 0.3 18,600 projected 5,580 P166.66 P929,963 sales, Feb. 0.7 16,800 11,760 P166.66 1,959,922 multiply Mar. 0.5 18,600 projected 9,300 P166.66 1, 549,938 covers by the April 0.4 18,000 average 7,200 P166.66 1,199,952 May 0.4 18,600 check 7,440 P166.66 1,239,950 June 0.3 18,000 5,400 P166.66 899,964 July 0.3 18,600 5,580 P166.66 929,963 Aug. 0.3 18,600 5,580 P166.66 929,963 Sept. 0.5 18,000 9,000 P166.66 1,499,940 Oct. 0.6 18,600 11,160 P166.66 1,859,926 Nov. 0.7 18,000 12,600 P166.66 2,099,916 Dec. 0.9 18,600 16,740 P166.66 2,789,888 TOTAL 219,000 P166.66 17,889,285  MONITORING SALES PERFORMANCE Once the sales forecast has been established, it is important to monitor and compare actual sales against the expected or forecasted sales. The difference is the sales variance. When sales do not meet the target, the management has to design and execute all possible measure to increase sales.  MAXIMIZING SALES Increase Patronage by: Increase Sales by: Massive promotions and advertising Suggestive selling and menu Product diversification – add more merchandising products Provision of incentives to customers for Maximize customer satisfaction them to avail of more products through improvement of product packages and service Increase of prices when warranted Continuously introduce new items Provision of incentives like rewards for agents to encourage them to maximize Provide satisfactory service their selling effectiveness Maintain the goodwill of patrons to Other measures sustain patronage Create a new market – like home delivery Other options