The Effective Management of Organisations in Tourism Industry - Assignment Example

I. Discuss the extent to which profit maximisation is , by itself , a sufficient criteria for the effective management of organisations in tourism industry. INTRODUCTION: Many businesses are benchmarked on quality of service, quantity of output or clients, the territorial coverage, profitability, social responsibility and sustainability. This essay concentrates on the profitability aspect in a hotel & tourism environment in England. BODY: The extent to which profit maximisation is, by itself, a sufficient criteria for the effective management of organizations in tourism industry is really very evident. Management is the hired hand of shareholders to pursue profit maximization. COMMENT: Some companies prefer to maximize profits but others do not prioritize it. The advantage of maximizing profit thru lessening costs like employee trainings and salary increases is that it will give bigger dividend payouts to stockholders but create possible labour union protests. The hotel industry (specifically Hotel Intercontinental) falls under tourism business. Profit maximization, in economics, is the process by which a firm determines the price and output level that returns the greatest profit. The total revenue -- total cost method relies on the fact that profit equals revenue minus cost. COMMENT: We can maximize profit by reducing unnecessary costs or expenses. We can also maximise profits by increasing the selling price thus increasing the profit. Management has to find ways to maximize profit without making the standard quality service offered to the general public suffer. We can give the hotel banquet department clients extra food (they call it side dishes or perks) or we could add some soft love music to the common waiting or guest area in the hotel. While the guests are whiling their time tinkering with their busy business portfolios and entertaining the clients' customers and friends in the hotel rooms or banquet or restaurant or even the bar area. Who knows, the swimming pool may be the most crowded area of the hotel. Profit maximization is the presumed goal of firms. In practice, business people often trade off making as much profit as possible against other goals, such as building business empires, being popular with staff and enjoying life. The growing popularity in recent years of paying bosses with shares in their firm may have reduced the costs that arise because. a) As a well respected hotel developer and operator, BDL operates a number of management contracts, where it delivers a range of services for its clients. The services range from standard hotel operations and management contracts based on a percentage of turnover and profit, to full or partial equity participation, development only agreements and/or pre-opening and launch contracts. COMMENT: BDL will maximize profit for its excellent services will increase the number of customers. The disadvantage of reducing costs to maximizing profit is that we may put a later date the expansion or promotional activities so that costs for the current period will not increase. Seminars and trainings for management level employees may be reset at a later date. Thus quality of employee performance may be affected. The morale of the workers will go down. This in turn will result in reduced quality of goods sold. The customers then will transfer to the competitors because of the poor quality of performance. b) Corus hotel placed an ad for housekeeping assistant at Maids Head Hotel, Norwich It offers a smart opportunity at Corus hotels with being responsible for helping to achieve the outstanding success of the housekeeping department. They are looking for a dedicated assistant whose super-efficient housekeeping can ensure their bedrooms, corridors and adjoining areas are kept spotless. Providing an enthusiastic service with above par interpersonal skills that adds to the satisfaction of our guests, applicant will prove a valued member of our team. Being honest and knows time management and able to turn out good ideas into realistic solutions is what is needed of the new applicant. COMMENT: An excellent hotel worker, in terms of time management & interpersonal skills with employees and hotel guests will result in maximization of profits. The workers in the hotel industry are the frontliners to the customers. Front desk staff and the banquet and food and beverage staff must always show their best smiling personality to the clients. This in turn will increase the sales and make everybody happy, the customers, the management and the waiters, bartenders. II. How important is it to set objectives in terms of social responsibility and sustainability Social responsibility is a doctrine that claims that an entity whether it is state, government, corporation, organization or individual has a responsibility to society. This responsibility can be "negative," in that it is a responsibility to refrain from acting, or it can by "positive," meaning a responsibility to act. SOCIAL RESPONSIBILITY There is large inequality in the means and roles of different entities to fulfil their claimed responsibility. The state, example England, should ensure the democratic rights of its citizens, that corporations should respect and encourage the human rights of its employees and that citizens abide with the written laws. But it also can be more than just that. Many NGOs mean that their role and the responsibility of their members as citizens is to help improve society by taking an proactive stance in their societal role. It can also imply that corporations have an implicit obligation to give back to society. (http://en.wikipedia.org/wiki/Social_responsibility). COMMENT: All persons have a social responsibility to have a harmonious relationship with his fellow human beings. He must not trample or waste the gifts of nature. Companies have the social responsibility to hire people to work for the company's goals and in return feed the employees' family. The company must follow the labour code in all its dealings with its employees. The company has a social responsibility to avoid making advertisements that tend to cater to violence, such as in some movies scenes, or use women who have their clothes almost naked or cater to unhealthy lifestyles. The quote "Cigarette smoking is dangerous to your health" must be placed in all cigarette advertisements. The company has the social responsibility in its employment procedures not to discriminate employees based on sex, race, or otherwise. The government has the social responsibility to give the companies and citizens a peaceful and business oriented climate so there will be free exchange of goods and services. Social responsibility means similarly with the saying do not do unto others what you do not want done to you. SUSTAINABILITY A sustainable system is one where the amount of output from the system does not exceed the amount of input. Put another way: for a practice to be sustainable it must not use up any resource faster than that resource can be replaced. Notice that the determination of sustainability is dependant upon both the rate a resource is being used and the rate the resource is being renewed (http://www.sustainabilityresearch.com/Thoughts/AnaDefSustain/index.php[sustainability research mar 4, 2005]) COMMENT: Therefore the number of hotels and hotel rooms that will be put up must not exceed the resources or money that the company has. It must have some cash and other resources to spend for emergency situations. But the sustainability procedures of the company must factor into its economic equation the inputs from the competitors, customers, government, suppliers, labour unions and others that will be affected by the company's sustainability actions. In accounting, Total Assets (resources owned by the businesses) less Total Liabilities ( loans and payables of the company) is equal to the total capital investments of the owners or stockholders or business partners. III. Give practical examples of how organisations in tourism industry have attempted to satisfy their social responsibilities or obligations. a) The British Institute of Innkeeping claims more education is needed to change binge drinking behaviour. John McNamara, the chief executive of the British Institute of Innkeeping (BII), has claimed that the new Home Office poster campaign aimed at tackling drunken and offensive misbehaviour. On 15 November, the government revealed a selection of strong poster images in the run-up to the change in UK licensing law on 24 November. These included vomit in the shape of 80 on a pavement - what offenders would be liable to pay as an on-the-spot fine - while another showed a man urinating a stream of cash down a drain. (British Hospitality Association by E-Zine Nov 17, 2005 news [http://www.leisureopportunities.co.uk/BHA/newsdetail.cfmcodeID=12983]) COMMENT: Drinking is a social problem to those who cannot control this type of leisure time. BII is the professional body of the retail industry sector that coordinates with its many outlets on social responsibility issues such as this. b) According to British American Tobacco, They are giving the public a new product called smokeless snus. Snus isn't smoked. It is finely-ground moist tobacco that are placed under the upper lip - and it has been reported by several independent health researchers to be much less harmful than cigarettes. Tests in South Africa and Sweden have proved that snus can reduce health impacts of tobacco. COMMENT: This is a very good example for British American Tobacco has taken the bull by its horn when it created another product that is socially responsible. c) Business in the Community is of seven hundred business establishments committed to continually improving society through corporate social responsibility actions. COMMENT: This big group will have a big impact in encouraging its members and friends to be socially responsible students. CONCLUSION Based on the actual data gathered on various hotel industries in England and other areas, profit maximisation is , by itself , a sufficient criteria for the effective management of organisations in tourism industry. For when the quality of service is excellent, the profit will increase or be maximized. When the quantity of clients increases, then the profit will also be maximized or increased. When you expand your hotels to other areas or regions, then your profit will be maximized or increased. Social responsibility will help improve the image of the company. Sustainability is a necessary procedure to keep the hotel business going. REFERENCES: Harrison & Enz, Hospitality Strategic Management, Page 292-294, Wiley & Sons, USA, 20005 Keiser & Demicco, Controlling & Analyzing Costs in Food Service Operations, New York,USA, 1993 Gray & Liguori, Hotel & Motel Management & Operations, P 138-155, New Jersey USA, 1980 Butterworth-Heinemeann, Franchising Hospitality Services, P 175, Great Britain, 2000 Harvard Business Review on Negotiation and Conflict, P 59-68, Harvard Business School Press, USA, 2000 Weihrich & Koontz, Management Global Perspective, P 66-67, McGraw Hill,USA,1994 (http://www.investordictionary.com/definition/profit+maximization.aspx) http://en.wikipedia.org/wiki/Social_responsibility http://www.leisureopportunities.co.uk/BHA/newsdetail.cfmcodeID=12983 http://www.bat.com/oneweb/sites/uk__3mnfen.nsf/vwPagesWebLive/DO6CKJNPopendocument&SID=&DTC=&TMP=1 http://www.economist.com/research/Economics/alphabetic.cfmLETTER=P#PROFIT%20MAXIMISATION http://www.bdlmanagement.co.uk/au_management04.htm http://www.jobsearch.co.uk/show_job.cgij=3311197&u=43529&h=308921133575370 Read More