Strategic

Management in
Tourism and
Hospitality

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 Tourism Management
vs

Hospitality Management

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Tourism Management

Tourism Industry
1. Vast and complex
2. Highly fragmented in its ownership and
control
3. Has a wide diversity of products and
destinations
4. Often divided with public and private sectors

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United Nations World Tourism
Organization (UNWTO) defines tourism
as:

Activities of persons traveling to and staying in

places outside their usual environment for
more than one day but not more than one
consecutive year for leisure, business, or other
purposes.

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Hospitality Management

According to Harrison, et al. (2005)

Hospitality industry primarily consists of
businesses that provide accommodation,
food and beverage or some combination of
these activities.

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Hospitality industry is at the same time more
and less than the tourism industry.
 It is more because it consist of many
businesses that are strictly for locals, and less
than the tourism industry because the
tourism industry is composed of many non-
hospitality businesses such as travel trade
(travel agents and operators), tourist
attractions (man-made and natural sites and
events), passenger transport companies and
macro issues at the destination level
(destination planning and development). 6
 CHAPTER 1

Strategy and Strategic

Objectives for Tourism
and Hospitality

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Learning Objectives:
1. Define strategy and strategic management
2. Explain Mintzberg’s Five P’s Framework of
strategy
3. Appreciate the importance and organizational
context of strategic decision making
4. Distinguish between strategic, tactical,
operational decisions
5. Explain the meaning of vision, mission and values
and describe the typical content of these
statements

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 What is
Strategy?
What is Strategic
Management?
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Strategy is about making you think
ahead regarding key issues affecting
organizations;

Strategic management is about

giving you concepts, frameworks,
tools and techniques to help you do
so.
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Professor Chandler’s definition (Harvard
Business School)

Strategy is the determination of basic long-

term goals and objectives of an enterprise, and
the adoption of courses of action and the
allocation of resources necessary for carrying
out goals.
Chandler, 1962

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Three Elements of Strategy
(based on the definition)

1. The determination of basic long-term

goals and objectives concern the
conceptualization of coherent and
attainable strategic objectives.

• Without objectives, nothing else can happen.

• If you do not know where you want to go, how can
you act in such a way as to get there?
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 Three Elements of Strategy
(based on the definition)

2. The adoption of courses of action refers

to the actions taken to arrive at the
objectives that have been previously set.
3. The allocation of resources refers to the
fact that

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SHORT CASE ILLUSTRATION
A journey from Berlin to Paris

By way of analogy we can consider a journey, say from Berlin to

Paris.
Your objective is clear: to arrive in Paris, travelling from Berlin.
However, in making this journey there are various courses of action
available to you. You might travel by train, by car, by coach or by
plane. You might travel on certain days or at certain times of day.
You might take advantage of certain concessionary fares and you
might make a booking through an intermediary such as a travel
agent, internet search site such as Expedia or book directly with the
principal company (the airline or train company). Thus as a result of
wanting to travel to Paris from Berlin, a whole range of options need
to be considered and detailed decisions have to be taken as to
which options to select.
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Resources
Resource inputs (sometimes called factors of production) are those
inputs that are essential to the normal functioning of the organizational
process.
These are the inputs without which an organization simply could not
continue to exist or meet its objectives. An organization’s resource
inputs fall into four key categories:
1. Financial resources – Money for capital investment and working
capital. Sources include share-
holders, banks, bondholders, etc.
2. Human resources – Appropriately skilled employees to add value
in operations and to support
those that add value (e.g. supporting employees in marketing,
accounting, personnel, etc.).
Sources include the labor markets for the appropriate skill levels
required by the organization. 15
Resources

3. Physical (tangible) resources – Land, buildings

(offices, accommodation, warehouses, etc.), plant,
equipment, stock for production, transport equipment, etc.

4. Intellectual (intangible) resources – Inputs that

cannot be seen or felt but which are essential for
continuing business success, for example ‘know-how’,
legally defensible patents and licenses,
brand names, registered designs, logos, ‘secret’
formulations and recipes, business contact
networks, databases, etc.

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Mintzberg’s Five Ps

A Strategy can be:

1. A Plan
2. A Ploy
3. A Pattern of behavior
4. A position in respect to others
5. Perspective

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Mintzberg’s Five Ps

A Strategy can be:

1. A Plan
2. A Ploy
3. A Pattern of behavior
4. A position in respect to others
5. Perspective

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 Mintzberg’s Five Ps

1. A Plan
a. It tends to imply something that is intentionally put in place
and its progress is monitored from the start to a predetermined
finish. Some business strategies follow this model.
b. It might include a statement on the overall direction that the
organization will take in seeking new business opportunities
as well as a schedule for new product launches, acquisitions,
financing (i.e. raising money), human resource changes,
marketing,

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 Mintzberg’s Five Ps
2. A Ploy
a. A ploy is generally taken to mean a short-term
strategy, and is concerned with the detailed tactical
actions that will be taken.
b. It tends to have very limited objectives and it may
be subject to change at very short notice.
Mintzberg describes a ploy as ‘a manoeuvre
intended to outwit an opponent or competitor’
(Mintzberg et al., 2002: 3).

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 Mintzberg’s Five Ps
3. A Pattern of Behavior

A ‘pattern of behavior’ strategy is one in which

progress is made by adopting a consistent
form of behavior.
Unlike plans and ploys, patterns ‘just happen’
as a result of the consistent behavior.

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 Mintzberg’s Five Ps
4. A Position in Respect to Others

A position strategy is appropriate when the most important

issue to an organization is perceived to be how
it relates or is positioned in respect to its competitors or its
markets (i.e. its customers). In other words, the organization
wishes to achieve or defend a certain position.
In business, companies tend to seek objectives such as
market share, profitability, superior research, reputation,
etc.
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 Mintzberg’s Five Ps
5. Perspective
Perspective strategies are about changing the
culture (the beliefs and the ‘feel’; the way of looking
at the world) of a certain group of people – usually
the members of the organization itself. Some
companies want to make their employees think in a
certain way, believing this to be an important way of
achieving success.

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Levels of Strategic Decisions

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Levels of Strategic Decisions

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Levels of Strategic Decisions

Tactical level decisions

Tactical decisions are concerned with how strategic
level objectives are to be met and how strategies are
implemented. They are dependent upon overall strategy
and involve fine tuning and adjustment. They are usually
made at the head of business unit, department or
functional area level and they have an effect only in
parts of the organization. They are normally medium-
term in timescale, semi-complex and usually involve
some uncertainty but not as much as at the strategic
level.

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Levels of Strategic Decisions

Operational Level Decisions

Operational decisions are concerned with the shorter-

term objectives of the business and with its day to-day
management. They are dependent upon strategy and
tactics. These decisions are made at junior managerial or
supervisory level, are based on a high degree of
certainty, and are not complex.

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Objectives

Types of Objectives
Objectives can be written in two forms:
1. Closed – stated in quantitative terms, specific in form
and timescale
2. Open – stated in qualitative terms, general in form
and timescale

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Objectives

Objectives in an organization are often portrayed as a

hierarchy in which the organization sets out:
 an overall enduring purpose by way of – its mission;
 a desired future position it is trying to reach – its
vision;
 how the mission and vision will be translated into
specific targets – corporate objectives, business
objectives, unit and personal objectives.

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Objectives

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