Strategic Planning and Management in Tourism Companies

Posted on May 4, 2024 in Economy

UNIT 2: The Planning Process and Elements

The planning process in a company involves a hierarchy of elements, starting with the mission or purpose, which defines the company’s reason for existence. This is followed by objectives or goals, which are specific, measurable targets that the company aims to achieve. Strategies outline the broad approaches to achieve these objectives, while policies provide guidelines for decision-making. Procedures offer step-by-step instructions for carrying out tasks, and rules specify actions that are prohibited. Programs are specific plans with defined timelines and budgets, and budgets quantify the resources required for these programs.

Types of Plans

Plans can be categorized based on various factors:

  • Frequency of Use: Plans can be permanent, used for recurring situations, or single-use, designed for specific purposes.
  • Scope: Strategic plans set the overall direction, while tactical plans focus on specific areas, and operational plans detail the implementation of objectives.
  • Timeframe: Plans can be short-term (less than a year), medium-term, or long-term (beyond five years).
  • Specificity: Plans can be specific, with clear definitions, or directional, providing general guidelines.
  • Subsystem: Plans can be tailored to specific departments or functions, such as procurement, operations, or finance.

TOPIC 3: Strategy

Strategy is a decision-making model that defines a company’s mission, objectives, and plans to achieve a competitive advantage. This involves understanding the company’s current and desired position in the market and the type of organization it aims to be.

Strategy Levels

  • Corporate Strategy: Sets the overall direction and long-term goals for the entire organization, including decisions on growth strategies like expansion or diversification.
  • Business Strategy: Focuses on creating a plan of action for a specific business unit, determining how to best compete in the market.
  • Functional Strategy: Determines how to utilize resources and skills within each functional area, such as finance, marketing, or human resources.

Business Level Strategies

  • Cost Advantage: Aims to gain market share by offering lower prices through cost reduction strategies.
  • Differentiation Advantage: Focuses on creating unique products or services that customers perceive as valuable, allowing for premium pricing.
  • Segmentation Approach: Targets a specific segment of customers with tailored products or services.
  • Rapid Response Strategy: Emphasizes speed and agility in responding to customer needs and market changes.

Corporate Strategy (Growth Strategy): Diversification and Internationalization

Diversification

Diversification involves expanding into new products or markets. This can be achieved through internal development or external means like acquisitions or partnerships.

Expansion Strategy

  • Market Penetration: Increasing sales of existing products in existing markets.
  • Market Development: Entering new market segments with existing products.
  • Product Development: Introducing new products to existing markets.

Types of Diversification Strategy

  • Horizontal Diversification: Offering new products in similar markets to the company’s existing ones.
  • Vertical Integration: Expanding into activities previously performed by suppliers or customers.
  • Concentric Diversification: Entering new markets with related products.
  • Conglomerate Diversification: Entering unrelated markets with new products.

Internationalization

Internationalization involves expanding the geographic scope of a company’s operations. This can be achieved through exporting, foreign direct investment, or strategic alliances.

TEMA 5: Coordination Mechanisms

Coordination mechanisms ensure that different parts of an organization work together effectively. Three main mechanisms are:

  • Mutual Adaptation: Informal communication and coordination between individuals or small groups.
  • Direct Supervision: A manager directly oversees and coordinates the work of a group.
  • Standardization: Establishing rules or procedures to guide how tasks are performed.

Organizational Design

Organizational design involves creating, modifying, and evaluating the formal structure of an organization to facilitate the efficient and effective achievement of objectives. This includes designing jobs, grouping positions into departments, establishing coordination mechanisms, and determining the degree of centralization.

Ways to Establish Coordination Between Departments

  • Performance Monitoring: Units have autonomy as long as they meet performance targets.
  • Action Planning: Coordination is achieved through joint planning and budgeting processes.
  • Lateral Links: Mechanisms like cross-functional teams or task forces facilitate coordination across departments.

Degree of Centralization/Decentralization

Centralization concentrates decision-making authority at higher levels, while decentralization distributes it to lower levels. Tourism companies often tend towards decentralization.

ITEM 6: Human Resources in Tourism Companies

Human resources play a crucial role in tourism companies as service quality and customer satisfaction heavily rely on employees. The industry’s characteristics, such as high employee turnover and the need for specialized skills, make effective human resource management essential.

Outline of Motivation Theories

  • Content Theories: Focus on identifying individual needs and how job characteristics can satisfy them. Examples include Maslow’s Hierarchy of Needs and Herzberg’s Two-Factor Theory.
  • Process Theories: Examine how various factors interact to influence work effort. Examples include Vroom’s Expectancy Theory, Equity Theory, Goal-Setting Theory, and Reinforcement Theory.
  • Integrative Models: Combine elements of content and process theories. An example is Porter and Lawler’s model.

Leadership

Leadership is the process of influencing people to work willingly towards achieving group goals.

Contingency Theories on Leadership

  • Fiedler’s Model: Suggests that effective leadership styles depend on the situation and the leader’s characteristics.
  • Hersey-Blanchard Situational Theory: Proposes that leaders should adapt their style based on the maturity level of their followers.
  • Leader-Participation Model: Focuses on the degree to which leaders involve subordinates in decision-making.
  • Path-Goal Theory: Emphasizes the leader’s role in helping followers achieve their goals and aligning them with organizational objectives.

Communication

Communication can be formal, following established channels, or informal, arising spontaneously through social interactions.

The Communication Process

The communication process involves a sender encoding a message, transmitting it through a medium, and a receiver decoding and interpreting it. Feedback ensures understanding and clarifies the message.

Forms of Communication in Tourism Businesses

  • Downward Communication: Flows from higher to lower levels, typically conveying policies, strategies, and objectives.
  • Upward Communication: Flows from subordinates to superiors, often involving feedback, suggestions, or concerns.
  • Cross-Communication: Includes horizontal and diagonal flows of information between individuals at different levels or departments.