Small Business Management - Lucrative Tourism Industry - Essay Example

Operations plan of a tourism venture business Name: Course: Instructor: The business will operate in the lucrative tourism industry. It will also in some degree be incorporated in the hotel industry.it will involve having tour operations to different destinations, accommodation for the guests, a restaurant where local cuisines will be served, selling of memorabilia and other artifacts to the tourists through the art curio shops that will be setup. There will also be an element of travel agency where we will make travel arrangements for the guest in exchange for a commission (Alan, 2012). MANAGEMENT OF THE BUSINESS The business will operate as a small business enterprise at first due to its size, it will exist as a family run business where I will be the overall director, however due to lack of experience a manager with rich experience in the tourism and hotel businesses will be hired. He will be answerable to me.in addition to the help of my family members a number of employees(less than 20) will also be hired especially as drivers, hotel cleaners, tour guides and salesmen.my family members will primarily deal with running of the travel agency due to the experience of my wife in the travel business (Alan, 2012). The business control will primarily fall to me as the head of the family business, all the primary decisions to be made have to be with my approval, however in my absence the decisions may be taken by my wife if: i) I cannot be reached and the decision is such that the survival of the business is dependent on it ii) In consultation with me. Almost all operations of the business will be local with exception of the travel agency business which will be done online. Capital to start the business will be from the family personal savings account or from borrowings against the family’s credit name and assets. ACQUISITION OF THE BUSINESS The business will begin as a new business venture and will as such begin from scratch. Capital will be raised from the family savings account and through applying for a loan from the bank using family assets as collateral (Tracy & Tracy, 2013). The business assets will be bought through use of this capital raised, in cases of assets such as motor vehicles a hire purchase arrangement will be put in place.in the case of the hotel building lease arrangements will be made and where necessary some buildings will be bought or built. Licenses for the business will be processed using the family name as the business name (Tracy & Tracy, 2013). The source of the business idea was the findings of a market research conducted which concluded that customer expectations in the tourism industry were not being met (Tracy & Tracy, 2013). There was existence of a significant and unsatisfied demand for many of the business products such as travel agency, tourism, art products and memorabilia. This ideas had to be evaluated to determine whether they were profitable or not, looking at the market it was discovered that there was a large fraction of the market which had not been exploited; there was a significant unsatisfied demand, the technical aspect of the idea also had to be evaluated; technically the idea was feasible, the products did not require any unavailable technical prowess (Alan, 2012).in addition it did not require any machinery that would require technical imports or technical training. Commercially, the idea was excellent due to the existence of a ready market.in addition operating costs were predicted to be relatively low (Tracy & Tracy, 2013). The venture was also found to be less risky as estimations of the cash flows predicted a constant flow of cash. Introduction of the product in to the market will differ from product to product. Existing products such as the tourism agency and the accommodation business will require a market penetration business strategy where the products will be charged at a lower price compared to existing market price so as to attract consumers, in addition we will diversify our product range by including the travel agency into the tourism ventures such that customers will be able to pay for their holiday package that includes accommodation, the actual holiday package and travel arrangements to and fro their homes all via our business (Alan, 2012). STRATEGIC MANAGEMENT AND PLANNING OF THE BUSINESS Although the business will begin as a small venture the business goal will be to be the leading provider of tourism products in the country as well as overseas.in addition it will strive to be the leading innovator in coming up with creative and innovative products for the market. This will be achieved through encouraging innovative products and employment of business strategies (Tracy & Tracy, 2013). This will be very important to the growth of the business especially with the recent research findings which showed a rise in the number of tourists both internal and external interested in tourist destinations throughout the country.in addition recent government policies such as increased marketing of the countries tourism internationally, trade treaties and tax allowances on the local firms in the tourism industry will only mean a larger, more significant demand for our products both internally and externally. The fact that most of our products are at their introduction stage in the product lifecycle will also mean that revenue from the products will also be in the increase (Tracy & Tracy, 2013). The business will employ both market penetrative and product diversification strategies. For existing products in the existing market we will seek to penetrate the market by employing a favorable pricing policy in addition we will introduce a discriminative pricing policy where foreign tourists will be charged more (Kao,1992). The target market or consumers will comprise mainly of low income local residents and medium to low income foreign tourists. This is because our main aim will be to provide low cost tourism products in the market. Objectives of the business will include :i) achieve a 40% profit ii) Control a 30% share of all foreign tourist transactions done locally by the 3rd year iii) Be recognized as the best in customer relations of all firms by the end of the 1st year THE MARKETING FUNCTION After the products have been evaluated, tried and introduced into the market, the problem now becomes how to make sure the product is adopted by the consumer and how to make sure the product is always in demand. Consumers behave in such a way that they can only consistently use a product if it they have knowledge on the product, a good attitude to it and if a product fulfills their needs (Tracy & Tracy, 2013). The target market for the business as indicated earlier will be low to medium income earners in and outside the country, this is due to the fact that they will be in line with the organization’s aim of providing low cost tourism products and they will also lower the capital outlay required for the startup, however the products will not be limited to this market alone.in future the target market will be extended to include high income earners and this will require that the market will be segmented (Tracy & Tracy, 2013). The local market complements itself with the foreign market as tourism is mainly a seasonal product. The products to be offered will include actual travels to tourists’ destinations, accommodation and restaurant services and travel agency services. The core product will of course be the provision of transport arrangements to various tourist destinations (Tracy & Tracy, 2013). The main strategy to be use will be the penetration price strategy where a relatively low price will be set.in addition other non-price strategies such as product differentiation will be used to ensure a consistent and large demand for the product. A strong and huge advertisement campaign will also be initiated to reach out to consumers. MARKETING STRATEGY: PROMOTION AND DISTRIBUTION OF THE PRODUCT Involves all strategies and methods employed to promote and ensure distribution of the product. Objectives of the market strategy will be to inform the consumer about the availability of a product, persuade them to prefer the product over those of competitors and to ensure loyalty to the product by emphasizing on its strong points (Tracy & Tracy, 2013). The marketing strategies to be employed differs from one target market to another, hence, the strategy to be used for the local market will be mainly restricted to advertisements in the local newspapers, radio and television in addition to posters and billboards to be set up. Sales promotion will also be a major tool and will be done through personnel sales and other publicity programs such as sponsoring charity walks and other community charity programs. Ratings and advertisements in the internet will be the main outreach to costumers located abroad the product is at its introductory stage the main aim of the marketing strategy will be to build and promote primary demand this will be achieved through targeting those who will be involved in promoting the product (Tracy & Tracy, 2013). The business venture will deal with its customers both directly and indirectly, local customers will be able to access information by visiting the premises of the business or by directly contacting the customer care desk of the business. They will be able to indirectly interact with the business via agencies which maybe partners with the business or via independent agents who bring in customers at a fee. Foreign customers will interact with the business through its website. The internet will be the major interaction tool here through application of e-commerce in the business; this is where all transactions from booking to payment are to done through the internet. INTERNATIONALIZATIONA AND E-COMMERCE The aim of the business is to continuously improve and increase its profitability; consequently it cannot only rely on the domestic market since it is limited in size. This means that it will have to internationalize its operations so that it can cut out a niche in the international market. Internationalization increases revenue, enhances efficiency and increases flexibility in the transactions of the business (Tracy & Tracy, 2013). Internationalization will be achieved through use of the internet that is through use of various websites in addition to the business website and through trade intermediaries such as international tourist agencies, by entering into joint venture agreements, foreign licensing and through international franchising (Tracy & Tracy, 2013). The best choice of entry will be entry strategy that minimizes cost while promoting sales.my business will concentrate on entering the international market through the internet that is e-commerce. I choose e-commerce entry strategy because of its many advantages which includes increased sales and revenues through its worldwide reach, ability to track sales and patterns of consumers, instant feedback and better customer relations through information and feedback; it also increases transactional efficiency thereby lowering the cost of business which increases profitability (Tracy & Tracy, 2013). The main focus will be on provision of the best customer service through provision of call centers which will be able to respond to any questions.in addition the website should be designed such that any information to be sought by a potential customer is readily available. Focus should also be on building a list of loyal customers under a community. Customer should be able to trust information on the website which will be multilingual. The site should then be promoted to create awareness. All of the products of my business will of course be eligible to transact online especially the travel and accommodation ventures. We then use the website to track sales using the number of people visited the site and the number of sales as conversion rate. All transactions should be authentic and care should be taken to protect the customer. OPERATIONS Refers to the process involved in delivery of the service and production of the artifacts for sale.it involves all value addition processes of the business. The main objectives of my business will be to provide high quality services and goods which will be used as a standard by other players in the industry, production of new innovative products by use of new processes and imagination, lowering the cost of production, reduce number of defective products.it should also ensure customers are satisfied by increasing confidence in delivery policy of the business, confidence in warranties and through doing after sale follow up to ensure customer satisfaction. The business will be located in Sydney, Australia in the cities central business district (CBD) particularly any building near the Sydney opera house. The business should be located fairly near the opera house and should be spacious enough for three businesses to be run from it.it should also be near other tourist attractions in the city and should be located such that it is visible from a far.it should have ample parking space with security a guarantee. At the front of the building just at the entrance will be the customer service desk complete with a lobby (Hatten, & Hatten, 2012). There will be sited two customer care personel.to the right of the customer care office will be the art curio followed by the travel agency office. To the left will be the tourist booking agency which will neighbor the restaurant and lodging rooms. Upstairs will be the general manager’s office. Outside will have parking for the company’s and the visitors vehicles. Since the business will be new the premises will be leased so as to lower initial costs. Majority of operations will be labor intensive. The restaurant will obtain its materials from the local suppliers through a tendering system. The art curio will buy art from local artists and sell at a 30% mark up. SERVICE AND RETAIL OPERATIONS The business will have both service and retail operations. Service operations will include provision of transport to tourist destinations, travel arrangements to and from their residences and accommodation for their stay. Retail operations are from food and drinks in the restaurant and sale of artifacts from the art curio. For the service operations however customer contact is more extensive compared with retail ones, this mean quality has to be higher and better. The business therefore has to configure its operations to ensure that it reduces costs, increases quality while reducing delivery time and provides the best customer service to be used as a standard by the other players in the industry. This is achieved by enforcing standard measure of acceptable services, increasing customer interaction and ensuring an accepted mix of retail and service products (Hatten, & Hatten, 2012). The service processes applicable in the business will include having the customer as the product; where we will ensure the customer gets the best services possible to ensure his stay is as comfortable as the price he paid for. Having the customer as a participant involves obtaining the customers’ needs and wants and using them to design a service process hence making the customer a participant in the process (Hatten, & Hatten, 2012). Cuisines will be available to the menu based on customer needs and will have to be preordered. As much as emphasis will be on customer satisfaction equilibrium between customer satisfaction and cost must be arrived at (Hatten, & Hatten, 2012). During periods of low demand incentives to increase demand such as lower prices and better packages will be initiated. Retail of the artifacts should be done in such a way that inventory is always at an optimal level but depending on the period of the season. During peak periods artifacts are on high demand and should therefore be available in large numbers and vice versa. Research should be conducted on how to enhance efficiency in both service and retail operations of the business (Hatten, & Hatten, 2012). THE FINANCE FUNCTION These section dedicates itself to the financial aspect of the business.it involves the planning of the financial resources of the business, keeping of records, management of the firms resources and the accounting process. Recording of the transactions of this business will be done electronically using computer programs which will be acquired. Depreciation will be dealt with under the reducing balance method unless advised and if it is to be changed notice to the change has to be effected (Parker, 2006). The firms accounting year will begin as from 1st January and will end on 31st December of every year. This means that the balance sheet will have to reflect the financial position of the company as at 31st of December each year. Goodwill is to be calculated and be incorporated into the business balance sheet as an asset. The income statement to be prepared must reflect all non-capital transactions undertaken for the year whether settled or not. Presentation of the statement will however be segmented into the various departments of the venture (Longenecker, 2012). Tourist agency, travel agency, art curio, accommodation and restaurant will each have a separate income statement (Acs, 2009). A group income statement will then be presented showing how the whole business performed for the year. A cash budget for the year will also be prepared by the manager so that it becomes a standard by which we can compare with the actual performance of the business. Quick books and other accounting soft wares will be fully utilized. Finally a cash flow statement will be prepared so as to show movement of cash and cash equivalents across the business departments. Financial ratios will then be compiled and comparison made between the current year performance and previous year’s performance. Comparison is also to be made to competitors’ performance and overall industry performance (Longenecker, 2012). SOURCES OF FINANCE As indicated earlier the business will operate as a family owned venture and will run as a small scale enterprise. Its seed capital will primarily be from the family savings account. Acquisition of assets will most likely be from bank loans; however, assets like buildings will be acquired by lease arrangement while motor vehicles will be acquired by hire purchase agreements (Acs, 2009). The restaurant and the art curio will obtain its materials by trade credit from their respective suppliers.in addition any loans from friends and extended family will be accepted. Bank overdrafts will be used to cover any liquidity problems that may arise from day to day. Collateral for the bank loans will be the family assets while a mortgage plan maybe sort for future expansion of the premises (Parker, 2006). As the business continues its growth we will be open to financing from business angels and venture capitalists. MANAGEMENT OF THE BUSINESS AND HIRING OF THE PERSONELL The management shall perform all of its traditional duties which will include planning, implementation, control and ensuring business goals are achieved. The organizational structure will be me as the CEO at the top followed by the managers then the staff at the operational level. The manager will be the leader of all the activities and should therefore have leadership and organizational qualities (Acs, 2009). Communication will be vertical from the CEO to the manager then to the staff however any grievances will be received by the CEO through the manager .Personnel to be hired have to have the highest qualifications possible with at least a year’s experience in the tourism field. Each staff will then be given a contract which will be renewable and will include what is expected of him and any consequence in case he fails in his duty (Hatten, & Hatten, 2012). In case a staff member quits or is fired, adverts will be placed to kick off a hiring process. Interviews will then be done and only the best performer will be picked. Performance appraisal will also be conducted to assess staff performance and design training programs to improve performance (Parker, 2006). Staff will be paid a determined basic pay with allowances and a bonus which will be determined by their performance and the performance of the business. The business will also undertake to insure the staff against their health and any injuries that may occur as they work. Staff will be expected to work with the motivation of achievement of company goals. The business will have its lawyer to advise it on any legal matters that may arise. The lawyer will be on the business payroll. REFERENCES Acs, Z. J., (2009). Innovation Policies, Business Creation and Economic Development: A Comparative Approach [Electronic resource]. Alan L. C., (2012). Understanding Family Businesses [electronic resource]: Undiscovered Approaches, Unique Perspectives, and Neglected Topics.   Hatten, T. S., & Hatten, Timothy S. (2012). Small business management: Entrepreneurship and beyond. Mason, OH: South-Western Cengage Learning. Kakkar, Arjun. (2009). Small Business Management: Concepts & Techniques for Improving Decisions. Global India Pubns. Kao, R. W. Y. (1992). Small business management. Toronto: Dryden Canada. Longenecker, J. G. (2012). Small business management: Launching & growing entrepreneurial ventures. Australia: South-Western, Cengage Learning. Parker S., (2006). The Life Cycle of Entrepreneurial Ventures [electronic resource]. Thomson Learning, (2005). Small Business Management: An Entrepreneurial Emphasis jgLongenecker, cwMoore, W.Petty, lePalich Mason, OH: South-Western College. Tracy, J. A., & Tracy, T. C. (2013). Small business financial management kit for dummies. Hoboken, N.J: John Wiley & Sons. Read More