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Strategic management in tourism and hospitality businesses - Coggle Diagram
Strategic management in tourism and hospitality businesses
Tourism, hospitality and events as service industry sectors
Goods and services
Goods: tangible – things you can own
Services: intangible – things done on your behalf or for your benefit. You do not own service products; instead, you use them.
THE products are ‘services’ rather than goods (physical products)
Service product characteristics
intangibility
cannot normally be seen, touched, smelt, tasted, tried on for size or stored on a shelf prior to purchase.
harder to buy, but easier to distribute
inseparability
provided and consumed simultaneously
Customers are likely to be very concerned about the way in which the product is delivered, i.e. the level of customer service
The task for the provider of a service is in many ways much more difficult - no chance to correct errors, any mistake can prove very costly in terms of lost future custom.
perishability
if the services are not sold at the time they are offered, then they perish and no income is received.
To be successful - ensuring that the organization is operating at full capacity for
as much of the time as possible.
need carefully designed actions for instance
to stimulate demand
lengthen seasons or offer appropriate pricing levels to manage
‘smooth out’ occupancy levels, load factors and attendance figures.
Break-even point
heterogeneity
never identical
The human element and other factors in delivering services, ensures that services will be heterogeneous, i.e. varied.
THE products are human resource intensive i.e. ‘people oriented’, and the human factor plays a key role.
an uncontrollable element inherent in the operation of a THE product -> solve
accurate and timely information is provided in advance to the potential customer in order to manage their expectations.
Special attention has also to be paid to the personnel who will deal with the client on a face-to-face basis.
ownership
When a consumer buys a service he or she does not usually receive ownership of anything tangible.
Service buyers are therefore buying only access to or use of something, which has important management implications.
Building a relationship with customers, of retaining their custom, and building brand loyalty becomes more difficult.
A summary of the key characteristics and their implications for THE managers
THE – specific service characteristics
high cost
often represent a relatively high-cost purchase for the consumer
has important managerial implications when formulating strategy, especially with regard to marketing aspects.
Potential customers will want reassurance about the reliability of the product, the value for money the purchase represents, and the quality and value provided.
Organization needs to provide product features of a consistent quality and build brand values that consumers trust.
Companies have to build up a relationship with customers over a period of time to provide reassurance before the purchase decision is made.
seasonality
have some of the most seasonal patterns of demand for any category of product or service.
Has important managerial implications in terms of aspects of management
managing cash flow
product pricing
managing the quantity of products supplied
dealing with labour (and wider societal) issues relating to the need to employ
motivate and retain seasonal employees.
ease of entry/exit
Significant barriers to entry
government requirements for companies to hold financial bonds or licences to operate
significant start-up capital requirements
planning restrictions
the pricing actions and tactics of established companies
relatively easy to set up in business or indeed to exit from the industry
implications of relatively low barriers to entry
find ways of differentiating the product, possibly on the basis of price or by adding additional features to the product which are valued by customers
establish and build a brand that is recognized and reassures customers
consider working cooperatively with other organizations through alliances and other arrangements.
interdependence
the 6 component sectors are all linked and depend upon one another; there is interdependence between them.
If one sub-sector fails to deliver a service, it has an impact on other sub-sectors.
The success of a product often depends on a supply chain in which there are many interdependent links
In response to the interdependence that exists, managers might try to gain greater control of the supply chain
buying suppliers, distributors or competitors
encouraging greater co-operation between suppliers, distributors or competitors
establishing rigorous quality standards for suppliers and distributors.
The impacts can be classified as economic, social and environmental and classified into positive and negative impacts.
The issues involved are often complex, interrelated and involve tourism together with other industrial sectors including hospitality and events
