Business and Management Decision Making - Essay Example

Business and Management Decision Making Introduction This paper is based on the hospitality services offered on the campus of the Glasgow The management of the hospitality services will be discussed in details by collecting information through observing the management of the hospitality services. The paper will highlight the competitive priorities for the management required to sustain the hospitality services of the company. Moreover, it will also discuss how the management will take care of the capacity of the service if the number of students increases in the next five years. It will cover a discussion on how the service should be managed differently than it is being managed today. Analysing Competition The hospitality services of the Glasgow University offers a wide range of catering service. The food products and other catering services are offered to a wide range of consumers starting from students, professors and other staffs. This as a result makes it a lucrative business for the University. Moreover, academic departments are also forbidden to outsource food from any other outlets. This as a result, has made them captive customers for the Glasgow University hospitality services. However, the institution also faces significant amount of competition from outlets outside the campus. These outlets include restaurants, pubs and other eateries which are in close proximities from the university campus. This as a result makes it easier for the students and staff to have an alternative option for eating outside the campus. This can be described from a theoretical stand point by highlighting the Porter’s five forces of competition. The Porter (2008) mentioned that the competitive force not only arise from the rivalry among existing firms, but also from four other direction. The Porter five force analyses will help to assess the level of competition faced by the Glasgow University hospitality service. This data will be then utilized to analyse the required changes that are required to make the service offering at par to the desired level. Power of Buyers: The power of buyers can be described in terms of their switching cost, which is indirectly proportional. If the switching cost of the buyers is low, then their bargaining power increases (Dalrymple, 2008). The availability of several restaurants and pubs in the close proximity of the university campus makes it easier for the customers to choose from several available options. However, outsourcings from outside eateries are not allowed in the campus. This as a result, reduces the buyers’ power slightly. Thus, the overall power of buyers has been assessed to be moderate. Power of Suppliers: The number of suppliers in the hospitality industry is quite abundant, this as a result, reduces the switching cost for Glasgow University hospitality service, which in turn reduces the power of suppliers to control price of the raw materials. Thus, the power of suppliers is low. Threat of Substitutes: The direct substitutes for purchasing food from university campus are to pack a lunch from home. Homemade lunch may pose as a significant challenge to the eateries including the Glasgow university hospitality service. However, it has been mentioned by The Economist (2013) that the eating out habit of the UK has significantly increased over the years owing to the increased busy and hectic lifestyle of the consumers. Moreover, eating outside also offers a wide range of food products which may be available in homemade lunch. Thus, the overall threat of substitute is low. Threat of new entrant: Owing to high growth rate of the fast food and outside eating industry, it has attracted several new entrants in close proximity of the Glasgow University. This as a result has made it a prospective challenge for the institution. Thus, the threat of new entrant is high. Rivalry among existing firms: The closest competition faced by the institution is against the two student unions, GUU and QM. These two unions are completely independent and have their own financial sourcing. The food items offered by these unions are almost identical to that of the Glasgow University hospitality service. This as a result poses a big competition for the institution. Moreover, it also faces significant competition from the surrounding eateries and restaurants. Offering Solution From the analysis of the competitive forces faced by the Glasgow University, it can be stated that in order to face the existing competition, the institution needs to change its current marketing strategy so as to increase the value addition for the customers. It has been evident that the primary competition is posed by the two student unions, GUU and QM. These unions offer identical food items and other services which allow the customer to have a very low switching cost. In order to face competition posed by the unions, the union needs to develop certain competitive priorities. These priorities are mostly on the grounds of pricing, food and service quality and flexible servicing. In order to increase the competitive advantage, the institution needs to create certain unique value proposition which cannot be offered by the rivals. Currently, the identical nature of the product and service offerings has reduced the differentiating factor of the Glasgow University hospitality service. Therefore, by redesigning the brand image of the institution will help to gain increased footfall and customer preference over the rival firms. In terms of pricing, the company needs to offer a high value for money proposition by reducing the price of the products and keeping the quality of the food items standard. Aaker (2010) have mentioned that the consumers make their purchase decision based on the perceived value of the products. The perceived value can be in terms of higher product quality or higher value for money (Doyle and Stern, 2010). The lower pricing will allow the institution to offer a proposition for higher value for money. Moreover, the Glasgow University hospitality service also offers several catering services for different events, meeting, conferences, etc. It also offers catering services for wedding events. These value added services needs to be enhanced and advertised aggressively so that the perceived value of the hospitality services offered by the institution is considered to be higher than that of its rivals. Baker (2007) has stated that the consumers of the fast food industry are becoming increasingly concerned about the health issues of outside eating trends. The consumers are more concerned of the increasing obesity and are switching to low calorie and hygienic food products. Furthermore, Bose (2010) have also mentioned that the firm which is primarily focused on meeting the needs of the customers are more likely to have a higher brand preference thereby leading to higher competitive advantage (Drummond, Ensor and Ashford, 2012). Thus, in order to face the existing competition, the institution needs to offer hygienic and healthy food items with low calorific value (BBC, 2014). Moreover, the quality of products should also reflect in the quality of service. Bowman and Gatignon (2010) have mentioned that the perceived quality of the hospitality service offerings is mostly dependent on how the staffs are managing the customers. Long queues and long response time is most likely to induce customer dissatisfaction. Cant (2009) and Guiltinan (2010) mentioned that the dissatisfied customers will not only shift to rival firms but they will also spread negative word of mouth regarding the previous firms. This as a result may severely reduce the footfall of the institute’s hospitality service. Therefore, the staff involved in the hospitality service needs to be properly instructed so that they can offer the best possible service to the customers (Ali, 2009; Alvesson, 2008). The flexibility should be another value addition for the customers. The hospitality services offered by the unions are mostly time bound and are not available beyond a certain point of time (Greasley, 2009). This rigidity of service offering of the unions can be leveraged by the Glasgow University by offering the services all day long, as long as the campus is open for the students and staffs. This flexibility will help the customers to have further value addition. Chernev (2010) have mentioned that time utility can also act as a determinant of consumer preference. If a customer is able to get his desired product whenever he wants, then he is most likely to have higher level of satisfaction (Anderson and Narus, 2007; Dayal, 2010). Thus, offering hospitality services all around the clock will allow the institution to have higher brand preference, thereby attracting more customers. Capacity Management It has been mentioned that in the next five years, the overall strength of the institution will increase by two times. This as a result will require the institution to increase the capacity of its hospitality services. Lashley and Taylor (2006) have mentioned that there must be a proper balance between the demand and supply in the business. The increasing number of students will naturally increase the demand of food products and other hospitality services. In order to adapt to the change in the strength of student, the hospitality service will need to make certain changes in its operational activities. These changes will mostly focus on extending the capacity of the service provider to serve a larger number of customers, without compromising on the quality of the products and service. In order to achieve that, the institution will have to get a clear overview of the actual number of students that will be admitted in the coming years. This will help it to make the actual prediction of the rising number of customers. Since no outside customers are allowed in the university campus, so it makes it quite easier for the institution to make accurate calculations of the maximum number of customers that may visit the outlet. Firstly, the company needs to increase the number of outlet and recruit more staffs to offer faster services. If the current capacity is not increased then in the near future the length of the queues and service response time will greatly increase, which as a result will lead to customer dissatisfaction and the institution may lose customer footfall. The number outlets and the number of staff need to be increased by 75%. This as a result will allow the institution to have higher human resources to handle the increasing number of customers. In terms of procuring raw materials, the institution also needs to change its dealings with its supplier so that it can increase the amount of raw materials being procured. The procurement of raw materials needs to be according to the current demand of the customers; any misbalance will lead to increased inventory cost or revenue leakage. This as result makes it imperative to have a clear insight of the upcoming strength of the students. Secondly, the increased number of students may cause space crunch near the outlets. Thus, the service provider needs to increase the number of chair and tables and also they need to increase the space of the kitchen itself, so that it can house more cooks and staff. As the number of students will increase in the near future, they may also prove to be prospective for the competitors like the two student unions. Thus in order to increase competitive advantage of the firm against the immediate rivals, it needs to maintain its distinguishing factors by keeping consistency in service quality. Conclusion It can be clearly stated from the above discussion that Glasgow University hospitality service faces severe competition from the rivals such as the restaurants and pubs in near proximity and the student unions. This steep competition has reduced the footfall for the institution. So, in order to increase the competitive advantage of the institution and to increase the customers’ preference in favour of the institution, it needs to make several changes in the operational activities of the hospitality services. The institution needs to create a differentiation factor that will allow it stand out among the rivals. This differentiation factor will be mostly on the grounds of value addition for the customers. Moreover, the increasing number of students in the coming years is needed to be managed by increasing the capacity of the hospitality service and increasing the resource inflow. This as a result will improve the competitive advantage of the institution and will ensure its long term sustainability. Reference List Aaker, D., 2010. Strategic Market Management: Global Perspectives. 6th ed. Oxford: Blackwell Publishing. Ali, S. S., 2009. Models in Consumer Buying Behavior, 3rd ed. New York: Harper Collins. Alvesson, M., 2008. Critical theory and consumer marketing. Scandinavian Journal of Management, 10(3), pp. 291-313. Anderson, J. C. and Narus, J. A., 2007. Business marketing: Understand what customers value. Harvard Business Review, 76(6), pp. 53-62. Baker, M., 2007. Marketing strategy and management. 6th ed. Basingstoke: Palgrave Macmillan. BBC, 2014. 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