Managing Hospitality Enterprises - Literature review Example

Managing Hospitality Enterprises Introduction MdTF is an organization that operates in the hospitality industry in a French island Corsica that is situated in the Mediterranean sea to its west and Ligurian sea to its north. The restaurant was established many years ago in the 12th century. However, the monastery was neglected for long and was only renovated in the 1930s with the facility being provided with 100 rooms to let. In spite of its renovation, MdTF has operated under its full capacity following mismanagement and quality issues. The firm has been purchased by the Al Majir family amidst many issues such as leadership issues, poor turnover, quality issues and marketing issues among other critical issues that require critical attention. In order to help revive the monastery, this paper examines strategies that could be used, approaches to change management and restructuring of the MdTF by the new owners. The management could use Porters generic strategies of cost leadership, cost leadership and segmentation to improve its competitiveness. Change could be initiated through learning and communication (Diamantis 2004, p. 307). Literature review Strategic Management As noted by Eldring (2009), modern scholars have focussed on the application of business strategies in the hospitality industry given the dynamism of the industry. The hospitality industry has grown rapidly and is attaining maturity at a fast pace than expected. The industry is characterized by intense competition in terms of high quality services and products, price and market share. In addition, it is also characterized by high concentration. Due to these changes, some scholars have perceived change transient (Wratshko, 2009). Strategic management in the hospitality industry could be defined differently based on different schools of thought. Drake et al. (2007, p. 86) notes that strategic management could be taken to imply the decision making process that is future oriented. The goal of this definition is for firms to formulate good decisions today in order to improve future performance. Strategic management could also be perceived as establishment a management that is result oriented. Miller & Dess (1993, p. 577) note that in such cases, managers are expected to present the results of their efforts after a given period. According to Beamish & Williams (2008, p. 91), strategic management believes in superiority of the proactive approach to management. Many strategic plans involve firms that analyze their current business environment and future environments, evaluate the situation and attain success instead of waiting for events to occur in order to stimulate analysis and action. Eldring (2009, p. 128) posits that strategic management is a continuous process that accompanies the management process at all levels and functions within an organization. However, the responsibility of initiating strategic management is the responsibility of the top management in the organization. The top management is responsible for designing and application of the formulated strategic plan. Therefore, strategic management could be used to imply a specific manner of managing an organization. As added by Longenecker et al. 2005, p. 117), strategic management involves integration and application of concepts techniques and skills within the firm. Different firms also integrate strategic management in the hospitality industry with borrowed knowledge from marketing, finance, industrial organization and organizational behaviour among other disciplines. Managing Strategically Intuitive strategy application in firms plays an important role in establishment of corporate behaviour. Firms operating in the hospitality industry manage using intuitive strategy without being aware of it. An investment in any given venture requires that the management of the firm be involved in detailed consideration of the prevailing market demand and the lifecycle of the industry among other factors. Porter (1998, p. 54) argues that such an investment decision requires further analysis especially in the hospitality industry that is characterised by complexity and uncertainty. Moreover, the hospitality firm could apply long term planning systems as it establishes specific strategies to increase competitiveness in the industry (Porter, 1998; Spreitzer, 1995; Longenecker, et al. 2005). Strategies The restaurant should apply various generic strategies as stated by Porter. According to Campbell et al (2002, p. 177), there are three main generic strategies that include differentiation, cost leadership and segmentation focus. The strategies are referred to as generic because they are applied at business unit level and are not industry or firm dependent. The generic strategies put forward by Porter can be displayed in the following chart. Cost Leadership Strategy Companies that have ability and capacity to produce goods use this generic strategy and services at costs that are lower than those of their competitors are and therefore earn more profit in selling high product quantities. As mentioned by Campbell et al (2002, p. 178), for a company to gain cost leadership, there has to be costs control and efficiencies. The company should seek to gain a unique access to lower cost materials. Low cost in production could be achieved through vertical integration decisions and optimal outsourcing. As long as cost of production is low, a company can offer products at lower prices and maximize sales. Companies that use cost leadership strategy take advantage of the economies of scale whereby the company produces large amount to enhance its competition in the market (Tang et al. 2002). Cost leadership is an important strategy to be applied by MdTF. The restaurant is experiencing a poor turnover following the poor services offered by its employees. However, the new management could exploit the cost leadership by reducing the number of employees to few trained employees while seeking the services of locally available food products. The offer of local dishes could also increase the uniqueness of the restaurant while exploiting the cost leadership strategy. The restaurant could control the costs while marinating efficiencies in the firm to ensure that there is no wastage. The new management could renovate the remaining section of the monastery that offers a capacity of 100 rooms in order to exploit the advantages of large scale production and operation (Mill 1986; Daft 2008; Dalgaard et al. 2005). Differentiation Strategy A study by Campbell et al (2002, p. 178) established that differentiation strategy involves creation of unique products and services in a given industry. The unique products and services have to be valued by customers as unique and the uniqueness is reflected in features, product design, brand image, network, technology and customer service. Companies that desire to use differentiation strategies have to develop commodities that offer unique attributes, which customers have and will value and perceive different and better than other competitors products. The uniqueness of the commodity adds value to it and this may require a company to charge a certain premium price, following the product’s uniqueness, the company can pass the increased cost to its customers who may not find substitutes easily. To succeed in the differentiation strategy, a firm has to invest in research to build innovative ideas; this requires the product development team to be creative and highly skilled. Due to the premium price that may be passed to customers, the sales team has to be strong and aggressive, with ability to communicate the product’s strengths to customers. The strategy also requires corporate reputation for innovation and quality (Wedel & Kamakura 2000, p. 124). Differentiation strategy is an important strategy for MdTF since it will distinguish the monastery from other tourist destinations around the world. Competition in the hospitality industry is stiff and the monastery needs to establish a unique feature to be identified with (Parasuraman, Zeikthaml & Berry 1985, p. 32). For instance, the restaurant could decide to offer unique high quality services and products so that its customers leave with a positive image of the restaurant compared to other tourist destination across France and the world. However, in order to establish the differentiation strategy, the organization will need to train its employees on good hospitality management practices while applying good leadership skills. Another unique feature that the restaurant could utilize to distinguish itself from the rest is the design of the restaurant that could be renovated to reflect modern forms of tourist attractions. Despite the old design, the location and features such as unique dishes and other tourist services could increase its competitiveness (Goetsch & Stanley 1995, p. 98; Dalgaard et al. 2005). Market Segmentation Strategy According to Campbell et al (2002, p. 180), a focus strategy focuses on a given market segment in which it applies cost leadership or differentiation strategy. Use of focus strategy helps in gaining customers’ loyalty. Most companies that use differentiation-focused strategy are able to provide a broad range of commodities in a given market. Focus strategy may however suffer changes in targeted segments and imitation (Griskevicius, Tybur & Van den Bergh 2010). Based on the number of tourists touring the island, the hotel should segment its market into different segments such as locals and international tourists. Market segmentation would help the hotel tap into the local market tourism expenditures that would boost its revenue. There are many French tourists touring other countries across the world. If MdTF could increase local awareness of the potential of the island and tourist attractions, it would bring a turnaround in its revenues (Chettamart & Emphandhu 2002, p. 122; Saxena 2010; Wratshko 2009). Change Management Change in organizations has been defined as the ability of an organization to involve unfreezing, moving and freezing values, practices and processes within the firm with the aim of achieving set objectives (Spreitzer 1995, p. 1449). Unfreezing is mean to mean establishment of the gap between what is expected and what is current happening in the firm that generates the need for change while reducing the resistance that employees in the firm could offer to change. While using moving, implies that an organization could initiate processes that promote change within the firm (Cathcart 1988, p. 13; Hatch & Schultz, 2003; Mill, 1986). Such processes could include training of employees, increased levels of education and restructuring within the firm in order to develop a new organizational culture. The organizational culture could involve establishment of new behaviour for employees and code of conduct, attitudes and beliefs. Moreover, refreezing is used to mean the ability of an organization to establish an a new state of equilibrium in the company under which the organization is able to maintain stability of the new established mechanisms and procedures using a variety of supporting mechanisms (Dalgaard et al. 2005, p. 32). As noted by Hatch & Schultz (2003, p. 1058), as organizations introduce changes, the management is likely to face resistance from within the firm and may also arise from customers or the external environment. Based on internal resistance to change, Shepherd (2002, p. 65) notes that it could arise due to the fact that change requires workers to alter their mode of individual operation within the firm. The change to an individual’s identity could provoke anxiety that is reflected in the employees’ denial, rationalization, idealization or fantasy (Drake et al. 2007; Botten 2009; Chettamart & Emphandhu, 2002). While initiating change, it is important that the management of a corporation utilize communication as a means of increasing understanding of the need and importance of change. Delahaye (2002, p. 239) argues that communication is key for sharing of information regarding the new changes to be undertaken, urge for participation of employees in the process and communication of the vision and motivation for undertaking change. In addition, communication enhances social support for employees while encouraging feedback on the undertaken changes and the change progress. Change Strategies for MdTF Employee Training MdTF has some issues at hand regarding its employees. The restaurant has received complaints from customers regarding the poor services offered by employees, their untrained nature, poor attitude towards work and self presentation. In addition, the employees in the restaurant do not perform their duties well as customers complained of the restaurant observing poor hygienic standards. These issues could be avoided and reduced using training and education of employees. The new management led by Al Majir family has retained it stop leadership while sacking lower ranking employees. The new employees should be well trained and fit for the positions in the restaurant in order to improve service provision. In addition, the management should initiate periodic training for its employees. Botten (2009, p. 165) notes that training would help employees learn important activities that keep consumers happy in the hospitality industry. For instance, employees would present themselves well as they observe the required etiquette in the industry. Training would help employee change their attitudes towards working in MdTF. This is because most employees value training as a means to career development (Mill 1986, p. 243). The top management team of MdTf has been retained by Al Majir family. However, the leadership has been perceived as unable to instigate change in the restaurant. However, this could change once the new owners reveal their objectives of the restaurant. Training of the top leadership in the restaurant could instil in them the importance of change and quality. The mangers would realize the importance of providing quality services. Apart from training, the firm could initiate workshops on important issues in the restaurant such as quality issues affecting the firm and how they can be improved (Groucutt, Leadley & Forsyth 2004, p. 209). Restructuring This is an important strategy that the new owners could use to bring about change in the restaurant. Restructuring involves changing of the human behaviour, beliefs and values. Daft (2008, p. 211) posits that firms are made of people whose perceptions of different things shapes and affects the performance of the organization. Restructuring of the behaviour and beliefs of employees and management in an organization involves learning. Learning could be conducted through workshops and training as explained in the above section (Wratshko, 2009; Shepherd, 2002; Cathcart, 1988). Adams & Weiss (2011, p. 228) conducted in a study on ‘Gendered paths to technology leadership’ in which they found out that through continuous learning, the leadership at organizations such as MdTF would realize modern ways of doing business. For instance, the internet is an important factor to the modern hospitality industry. The restaurant has an outdated website that should be developed to have a new modern look so that tourists could access what the restaurant offers online. In addition, booking of rooms and conducting of business could be transacted online rather than traditional physical business transactions (Saxena 2010, p. 71; Chettamart & Emphandhu 2002; Adams & Weiss 2011). Quality Issues within F&B Management Quality is an important factor in the running of any organization. Furthermore, Zimmerman & Knell (1988, p. 106) argue that the quality of products and services offered by an organization in the hospitality industry goes a long way in establishing the uniqueness of the firm while increasing the competitiveness of the firm in the competitive industry. In order to achieve quality of services being offered by an organization in the hospitality industry, teamwork and communication should be applied in every activity of the firm. Services are intangible and perishable as they are consumed by consumers in the tourism industry. Since total quality management in the service industry differs from manufacturing industries, provision of quality services in the industry should focus on the customer given that the customer is always present when the service is offered (Porter, 1998; Spreitzer, 1995; Longenecker, et al. 2005). F&B management is faced with many quality issues as provided by the feedback from customers. To begin with, F&B management should establish the focus of service provision as satisfaction of the customer. This could begin with restatement of the mission of the restaurant in order to reflect the objectives. The mission and vision of the firm should be communicated to all employees in the restaurant so that every employee knows and understands what is required of hi/her. Since the satisfaction of the customer would be the focus of the firm, employees would behave professionally, well dressed and maintain a clean environment that is attractive to tourists. The services provided should be reliable. Lastly, the restaurant should provide assuring services with employees showing empathy and responsiveness (Stacey, Griffin & Shaw 2000, p. 102). Conclusion MdTF is faced with unprofessionalism of employees, poor leadership and a dirty operating environment that have left customers dissatisfied. To rectify the issues and improve the competitiveness of the monastery in this competitive age requires that various strategies and changes be made. Faced with many issues, the management at MdTF could utilize cost leadership strategy through utilization of locally available resources to minimize costs. The monastery could segment its market into local and foreign visitors’ markets while improving the quality of services provided in order to distinguish itself from the rest. Change in the firm should be achieved through increased learning that could be attained through workshops and training. A good organizational culture should be established in order to encourage a clean environment, professionalism and high quality. Marketing of the hotel could be achieved through modification of the monastery’s website to reflect the modern industry that is characterised by e-commerce. These changes and strategies could help the firm improve profitability. References Adams, SM & Weiss, JW 2011, Gendered paths to technology leadership. New Technology, Work and Employment, vol.26, no.3, pp. 222-237. Beamish, K & Williams, J 2008, Analysis and Evaluation, Oxford: Butterworth-Heinemann. Botten, N 2009, Enterprise strategy: strategic level, E3, Butterworth-Heinemann, Masachusetts. 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