Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 9: Strategic evaluation and selection for tourism, hospitality…
Chapter 9:
Strategic evaluation and selection for tourism, hospitality and event organizations
Identifying strategic options
Direction of development – product and market decisions
Determine not only the levels of profitability, but also the survival of the organization itself
Involve a change in the SBU or company’s size
Strategic Method Decisions
Degree of control over future strategic decisions
Speed with which a change in the position of the SBU could be achieved
Resources that are required
Need to re-configure the internal value chain of the organization
Competitive strategy decisions
The culture and structure will need to be configured
The organization sources and configures its resource base will need to support the strategy
Determine the way that the internal value chain activities are configured
Applying evaluation criteria
Feasibility
Feasibility is concerned with assessing whether the strategy is capable of working in practice
Culture, competencies and resources, which are internally controlled by the organization
External: the acceptance of customers and suppliers, competitive reactions and necessary approvals from government or regulatory bodies
Acceptability
Returns
Risks
Reactions of stakeholders
Suitability
Suitability is concerned with assessing whether the strategy is capable of enabling the organization to
achieve its strategic objectives
Suitable when
Exploit opportunities in the environment and avoid or address the threats
Capitalize on an organization’s strengths and avoid or address the weaknesses
Address the expectations of stakeholder groups
Financial tools for evaluating returns
Cash flow forecasting
Cash-flow forecasting involves a forecast of
The expected revenues from an option
The costs that will be incurred, derived from the product of the revenues and costs, the net cash inflows or outflows
Shows for particular options
Postponing capital expenditure
Accelerating cash inflows
Postponing or reducing cash outflows
Investment appraisal
An investment is some money put up for a project in the expectation that it will enable more money to be made in the future
Methods
Payback method
Breakeven analysis
Accounting rate of return
Net present value (NPV)
Internal rate of return (IRR)
Non-financial tools for evaluating returns
Cost–benefit analysis
Cost–benefit analysis applies to almost every area of life, not just strategic evaluation and selection
The problems
Some of the ‘measures’ that are used are in fact subjective judgements and consequently open to challenge
There is no agreed methodology and in reality the term covers a range of approaches
In many cases there are issues about knowing just where the analysis should stop
Impact analysis
The aspects that might be impacted upon will depend upon the particular circumstances of the option
Development’s implications
Local employment
The effect of the development on other businesses
The aesthetic
Scenario planning and sensitivity analysis
This is designed to show how sensitive
the cash flow is to its assumptions – hence the name
In other words the sensitivity of earnings to fuel price changes would have been assessed
Strategic evaluation in emergent strategies
Emergent strategy has no specific objective. It does not have a preconceived route to success but
it may be just as effective as a deliberate strategy
Deliberate strategy: It is preconceived, premeditated and usually monitored and controlled from start to finish. It has a specific objective