Business Environment of Perdido Beach Resort - Case Study Example

Case Study: Business Environment of Perdido Beach Resort Hospitality industry has proved to be a very competitive sector of the economy where only those business enterprises that have fully mastered the game survive. Mastering the game has been contextually used here to mean understanding the dynamics in the industry, business threats and opportunities thereby operating on a more informed basis. This calls for a careful evaluation of the organisation’s environmental factors; both external and internal and their role in shaping up the business (Tesone, 2010: 102). It is worth noting that the opportunities and threats that a business faces emanate from its environment and failure to recognise how and to what extent these factors impact on the overall outcome of the business may obviously put the firm at a position of failure. Issues such as legislation, culture, climate among others are prevalent conditions that affect the hospitality industry over time and considerable examination into such factors is a prerequisite action by the management team if high performance and success is ultimately targeted. This essay is a comprehensive report based on a case study evaluation of Perdido Beach Resort (United States) that unveils various ways in which the outlined environmental factors impact on the organisation as it suggests possible remedies to counter the challenges. Perdido Beach Resort is a hotel within the United States hotel and hospitality industry that primarily exists to provide hotel and accommodation services to tourist both local and international, who visits the famous Orange beach in the US. Located in a lone Island in Alabama, the hotel enjoys a serene environment that continually attracts its customers who visit the region for adventure and leisure. Perdido Beach Resort also offers large meeting/ conference facilities that are aimed at capturing local and international business retreats, conventions, wedding and vacations among others. However, throughout its strive to excel and emerge the best in the hospitality industry in the US, the organisation has been faced with several environmental influences that have undoubtedly undermined its operation in successful hospitality service delivery. There are several factors within and outside Perdido Beach Resort that influence its operation and subsequent positioning in the American hospitality industry. These factors as will be discussed can be found to either influence positively or negatively on the way an enterprise works in its day to day activities as it aims at meeting its objectives. This evaluation is on the assumption that Perdido Beach Resort operates as whole single system that has its parts specialised for different functions but contributes through a chain of coordinated management structures to help meet the common set goals. These internal and external factors are discussed at random and their impacts outlined below. Organisational Structure and Culture Based on systematic thinking approach, Perdido Beach Resort is regarded as a whole single unit or system that functions as one to achieve its objectives. The system has parts that are coordinated through the various team leaders and managers to make the operations free-flowing without any halt. The organisational structure is designed based on functionality such that sub-units in the company comprise of personnel who are covered under the same professional umbrella and headed by relevant experts within the same field. For example, those who deal with accommodation have their head or leaders amongst them just like the chefs among others. This is so because of the realisation that best leaders come from those who have deep insight into what their followers are engaging in thereby creating a pillar of inspiration. Generally, the company is headed by a Chief Executive Officer (CEO) who reports to the Board of Directors. The CEO is the topmost directly involved executive officer who oversees the operations and make most of the decisions within the organisation as well as showing directions to follow as the firms pursues to achieve both its short term and long term objectives. The person is the overall unifying factor that brings consolidation and integration as operations within the organisations are undertaken. It is the effective leadership within the organisation right from the basic units to the top most level in the company that has seen it record high performance and maintain high competition in the industry. The manner in which personnel motivation and compensation are carried out has seen great results in terms of employees’ outcome. The system functioning of the organisation is primarily coordinated by the effective leadership strategies that include styles such as participation and democratic leadership styles (Hudson, 2008:89). The healthy senior-junior and employer-employee relationship has created an enabling working environment for high performance. Obviously, workers enjoy operating in environment where the administration and the leaders motivate, appreciate and relate well with them. This environment that has been created through effective leadership, which is a result of good and healthy management structure, has positively influenced the overall performance of Perdido Beach Resort. Since communication is a very key element in an organisation, Perdido has put mechanisms in place to ensure that the channels through which effective information transfer are enhanced. The company provides employees with computers that are installed with software that provide platform for communication with any colleague or even the top management if there is a serious issue. The electronic space also enables the employees to raise complaints and recommendations in a more confidential manner. This has raised loyal and the faith that the workers have on the organisation as they feel understood and cared for by the management. The general culture and work climate that has been brought through the organisational structure and leadership has enormously increased its production outcome and quality service delivery (Hudson, 2008:76). Nature of Workforce Consequently, the kind of employees in this organisation forms an internal factor worth considering based on the fact that production of quality good s and services cannot be achieved if the workforce are not functioning well (Barth and Hayes, 2006:177). With its culture of recruiting young vibrant and professionally qualified personnel, its pool of workforce is dominated by highly intrinsically motivated individuals whose passion and commitment are unbelievable. To get these kinds of personnel, the human resource panel do critically vet and carefully evaluate the people they hire to ensure they will deliver even with little or no supervision. Personality is great factor to consider in a hospitality industry such that those hired can actually deliver in a hospitable manner. Also based on the nature of the industry, Perdido hires very smartly groomed and physically appealing personnel who can please the customers. The organisation usually do SWOT analysis most often to assess the nature (Strength and Weakness) of its employees and assign the right strategies to bring out the best out of them (Walker and Miller, 2010:99). These many aspects of the workforce have been a significant role player in the success of this organisation as they have single-handedly driven the business even when external factors were not so suitable. Competition Central to the macro business environment for a business is the level of competition within the industry that the firm operates (Tranter and Parker, 2009:100). In the US hospitality industry, there is a stiff competition between firms that are located in close proximities offering exactly the same products and it is upon the organisations to find the right strategies to enter the market and gain competitive advantage over other players so as to beat them and emerge the best. Perdido Beach Resort is physically located in a place that has several other hotels that greatly influence its operations with very little or no power is controlled over this factor. With the recognition of this stiff competition, the company has resorted to a number of strategies that have seen it survive and sustain itself in the industry. Among the things it does to gain a competitive advantage is to innovate new ways of production that eventually affect positively the outcome of the goods and services they provide. This innovation in most cases has rendered competition irrelevant as Perdido becomes the only player in the new market (Blue Ocean). With its intensified market research, it has tapped and exploited various market gaps that exist and filled them with unique product such as fresh customised cocktails and popcorns; products that most of its competitors do not offer making Perdido Beach Resort to stand out in the industry. It is however noteworthy that the proximity of the businesses is a great concern for the industry players as it further heightens competition. The fact that many hotels are located in the beach reduces Perdido Beach Resort performance in the market significantly. For example, a customer who has planned on visiting the hotel may end up getting admission in another when they get to the beach because of the closeness. This has affected the sales volume for Perdido so significantly that the management are currently reviewing other ways of handling these customers who change their minds when they get to the beach so that further loses cannot be incurred. Among the many strategies used by the organisation in counter-neutralising stiff competition is through price reduction such an in accommodation charges and intense market promotion through media advertisement. These imply that the concentration of the industry makes the organisation to use additional funds to remain relevant in the market; a factor that is negative to it as its profit margin is minimised (Sawyer, 2008:149). Suppliers Since the industry is concentrated with high demand for raw materials used in production in the hotels, suppliers tend to charge high prices for their goods and services which negatively impact on the organisation. If Perdido Beach Resort existed just with few more firms in the industry, it is undoubtedly believed that the cost of production would be much lower since supply cost would be reduced because of low demand. The suppliers are overwhelmed by the many organisations that require their goods thereby making them shoot up the prices at will and since the firms do not want to excessively increase their prices to lose competition, they end up incurring high production cost which cannot be compensated for by the pricing of their products. The supply issue can be resolved by finding amongst those available the cheapest suppliers who provides the same products and can be relied on. The firms in the industry can also combine to negotiate with the suppliers with one voice (Gilmore, 2005:66). Government Policy and Legal Framework The obligation to abide by the policies that govern the operations of the industry is a major concern for Perdido Beach Resort. The taxation policy in which the organisation is required to pay high taxes has affected it negatively. The business took so long to expand because of the likely regular fee that will be charged on it upon expansion. Market entry is a long process with rules that restrict most of the investors making it a real complicated thing especially for non-citizens (Gilmore, 2005:134). However, the government can be commended for creating a good working environment by providing the necessary social amenities that makes the operations in the area so easy and efficient. For example, there is sufficient security, good infrastructural network and modern telecommunication facilities that enhance production and service delivery. The organisation can combine with other players in the industry to organise a negotiation bargain with the government so the taxes may be lowered (Enz, 2010:111). Socio-Economic Factors The social standards in which the business operates have direct influence on the response that the target customers will make in regard to the company’s products (Hayes and Ninemeir, 2009:50). Values, opinions, perception, attitude, judgment, and consumer behaviour among others are significantly influenced by culture. Social factors have close relationship with the outcome of the economic behaviour and response and this means that for Perdido Beach Resort to do well, it must synchronise well with the social standards in the area. Generally, the business has been favoured by the surrounding social atmosphere and culture which promotes leisure activities (Henson, 2009:160). The American society of the 21st century recognises the need to go out and have fun and this makes the hospitality business boom. Most weekends and holidays are spent on the beaches with family and friends and most people prefer these destinations. Moreover, the economy of US is stable and this implies that per capita income is high implying that people can have some surplus money to spend in the beaches unlike countries with low standards of living in which people struggle so much even to afford food. The organisation has to keep on assuring through its operations that it is working within the social moral provisions and standards of the culture to maintain that positive perception (Sloan and Chen, 2009:118). Technological Factors Increased technological advancement has seen the hospitality industry grow bigger and better. Perdido Beach Resort has not been left out in embracing the new sophisticated technologies in improving the quality of products they avail to the customers in the market (Henson, 2009:150). For instance, cooking in the hotel has been improved by use of technologically advanced facilities such as better and larger fridges, microwaves, cookers among others. The security of the places have also been improved by technology and with the introduction of surveillance systems such as CCTV, a more enhanced secure environment to enjoy has been created (Pizam, 2010:100). Information and communication systems have also been advanced as phones are all over including the accommodation rooms in which customers can request for assistance in case of any problem. Technology has generally enhanced the operations of Perdido Beach Resort. Geographical Factors Accessibility to the beach is enabled by the large network of roads although some customers do complain that it is so far away from regions where people live and sometimes some may get discouraged when they imagine the distance (Sawyer, 2008:133). This poses a problem sometimes, although not often to the management when they get calls from potential customers who upon description of the location give up on visiting the place on claims of long distances. The business can cut down the charges for customers coming from very far to encourage them (Worthington and Britton, 2006:65). Suppliers as well charge exorbitant prices on their products because of the location of the business. However, the geographical location has great benefits for the visitors who adventure thee beaches as they find the climatic conditions there extremely favourable making them to visit over and over again (Kotler and Makens, 2006:170). The fact that there so many natural resources like large waters makes it even more selling. Conclusion and Recommendations The micro and macro environmental factors as evaluated above show clearly how positively or negatively they can greatly impact on a business and shape up the operations of its operations (Hudson, 2008:119). The management therefore have to a do a SWOT analysis and determine all these factors, both that the business has control over from within it and those it has little or no regulation from that comes from the outside (Walker and Miller, 2010:106). Perdido Beach Resort has been favoured by the great control it has over most of its internal factors. However, it faces challenges in areas such as competition, supply chain and taxation. The business needs to reach out more to potential customers through the social media that touches large populations though online forums. Most people will most likely be accessed if these platforms are utilised. Probably, the competitors are using social sites such as Facebook, Twitter, and Instagram among others to gain access into the market and invite clients to come to their places. This could be a competitive advantage that the other players in the industry are using to gain advantage over Perdido Beach Resort (Henson, 2009:111). Alternative means of acquiring the raw materials and resources such as combined efforts by other firms can be explored to reduce the high cost paid to the suppliers (Tranter and Parker, 2009:128). Also, through their unions, the industry can negotiate with the government to lower down the taxes and offer subsidies. If these are done, the firm will make great steps ahead in the hospitality industry. References Barth, S.C. & Hayes, D.K. (2006) Hospitality law: managing legal issues in the hospitality industry, Hoboken, N.J., John Wiley & Sons. Enz, C.A. (2010) Hospitality strategic management: concepts and cases, Hoboken, N.J., John Wiley & Sons. Gilmore, S. (2005) Cases in human resource management in hospitality, Upper Saddle River, NJ, Pearson/Prentice Hall. Hayes, D.K. & Ninemeier, J.D. (2009) Human resources management in the hospitality industry, Hoboken, N.J., John Wiley & Sons. Henson, A. (2009) Albanias business environment, London, GMB. Hudson, S. (2008) Tourism and hospitality marketing, Los Angeles, SAGE. Kotler, P., Bowen, J. & Makens, J. (2006) Marketing for hospitality and tourism, Upper Saddle River, NJ, Pearson Prentice Hall. Pizam, A. (2010) International encyclopaedia of hospitality management, Amsterdam, Elsevier/Butterworth Heinemann. Sawyer, N. (2008) Hospitality, the sacred art, Woodstock, Vt, SkyLight Paths Pub. Sloan, P., Legrand, W. & Chen, J. (2009) Sustainability in the hospitality industry, Amsterdam, Butterworth-Heinemann/Elsevier. Sommervile, K.L. (2007) Hospitality employee management and supervision: concepts and practical applications, Hoboken, N.J, Wiley. Tesone, D. (2010) Principles of management for the hospitality industry, Amsterdam, Elsevier/Butterworth-Heinemann. Tranter, K., Stuart-Hill, T. & Parker, J. (2009) An introduction to revenue management for the hospitality industry, Upper Saddle River, NJ, Pearson Prentice Hall. Walker, J.R. & Miller, J.E. (2010) Supervision in the hospitality industry: leading human resources, Hoboken, N.J., J. Wiley. Worthington, I. & Britton, C. (2006) The business environment, Harlow: Financial Times Prentice Hall. Read More