Management Theories Tools and Techniques - Case Study Example

Running Header: Management Theories, Tools and Techniques Student’s Name: Instructor’s Name: Institution: Course Code: Date of Submission: Title Report Hotel Industry: Management Theories, Tools and Techniques Table of Contents Table of Contents 3 Executive summary 4 1.0 Introduction 5 2.0 Background information 6 3.0 Literature review 7 3.1 Strategy management 7 3.2 Employee empowerment through training and development 8 3.3 Cost management 9 4.0 The methodology approach 10 5.0 Results 10 5.1 Case 1: The “Heavenly Bed” Business brand name 10 5.2 Case 2: The Marriot Hotel-Management of resources 11 5.3 Case 3: Diamond and Trump-partnership 12 6.0 Discussion of results 12 7.0 Conclusion 14 8.0 Recommendations 14 8.1 Brand name 14 8.2 Joint venture 15 8.3 Cost management 15 8.4 Employee training and development 15 References 16 Executive summary The work of this report was to critically analyze the success of operations management theories, tools and techniques in the hotel industry. During this study it was found out that like all other sectors of the economy, success of the hotel industry is of significance not only for the owners but also the government. This is because of the revenues generated by the government in form of taxes. World over the hotel industry, is becoming very competitive thus prompting the managers to come up with strategies that can make them relative and profitable in the industry. This report has extensively the background of managerial theories, tools and techniques used in the hotel industry. The author of this report has used the secondary sources of information which involve the case studies of the hotels that have demonstrated the importance of different management practices in the hotel industry. This report has also reviewed and discussed various literatures on the topic. Finally, this report has posed some of the recommendations that can be applied the hotel managers to improve on the operations which include: building of strong brand names, entering into joint ventures, cost management and finally designing policies that regulate employee training and development. 1.0 Introduction The hotel industry business world over is becoming very competitive. This is has been worse with the emergency of the fast foods in the middle of the 20th century. While entering into the hotel industry business, one is expected to remember that challenges will always be there both internally and externally. Many hotel companies are embarking on strategies that are geared towards expanding business across boundaries for greater market opportunities and better returns to the business. This has been demonstrated by different hotel companies from the United States, Europe and Asia. One such good example is the Macdonald’s chain of restaurants. The hotel industry is also having difficulties in managing business in a very saturated environment where customer tastes and demands have continued to change year in year out. Recovery and reinvention of proper management theories, tools and techniques are expected to offer the customer high level of experience by taking into account what are there needs and how they want to be served. In the industry many hotels have succeeded while others have failed. This is because of the managerial tools, techniques and theories that they apply in managing their businesses (Bayraktaroglu and Kutanis 2003, pp. 149). This for example is what has been key source of success of the MacDonald who has managed over years to deliver outstanding customer services in the hotel industry. The Marriot chain of hotels and restaurants has also been at the top by providing high class lodging services. Successful hotels are also those that have been able to develop and nurture good partnerships with organizations, teams and individual persons that have stakes in the business. However, the primary aim of this report is to critically examine the success of various operations management theories, tools and techniques in the hotel industry. This is to provide critical information for the managers to develop good decisions that can make the hotel business a success. 2.0 Background information Hotels and restaurants form one of the most competitive industries in the world of business. The hotel industry primarily consists of business that offers a variety of services such as accommodation, food and drinks or a combination of them. The common feature of the hotel industry is that it provides mostly non tangible products which are almost consumed instantly and therefore require intensive involvement of people in the process. However, some restaurants are known to serve both non residents and local guests. Offering customer experience is becoming very critical in this industry. However, the challenge with this industry is that it comprise of several and complex structures which the managers must be very keen to take into consideration its effects to the business. The structures that already exist in the hotel industry include: direct ownership through chains, franchises and assets management as well as consortia. In addition, the hotel industry is also becoming more complex because of the need to move away from just hosting visitors to a more entertaining and comfortable services whereby the visitors are provided with personalized and socialized care. The main focus of this report will be to examine the various strategies that are used in hotels to enhance the provision of food and lodging services to the travelling guests as illustrated by Lashley (2001, pp 51). 3.0 Literature review 3.1 Strategy management Strategy management in the recent years has become one of the key management tools in the hotel industry. Strategic management is considered is considered very critical more especially with the changing trends in the industry. In this case therefore strategizing is used as key management tool by hotels purposely to enable them compete effectively in the global market. With the advent of modern transport and communication means, businesses have been globalised world over thus creating room for very stiff competition. However, more surge for strategic management, has been accelerated by the introduction of the internet. In general, the change in the business environment has necessitated the need to embark on strategy management. Israeli et al (2006, pp. 861) identified three main perspectives of strategic management which include: change from traditional business view, resource based management perspective and stakeholder management perspective. In the traditional perspective, many businesses were engaged in analyzing both internal and external environment under which the business operates in order to determine weaknesses, strengths, opportunities and threats (SWOT). This process helps in designing the company mission, goals and objectives. In other words the hotels will be expected to organize its internal strengths to neutralize their weaknesses and at the same explore new business opportunities. Based on the traditional approach, the hotel managers are expected to analyze the environment in order to determine the best strategy to use for the business. This approach is also known as environmental determinism (Cernat and Holmes 2004, pp. 27). According to this strategy, good management system is the one that will fit into the environment and at the same time can be supported available resources and technical expertise. On the other hand, resource-based management view is another perspective of strategy development which has received wide acceptance. This follows after research had shown that some hotels were outperforming others whom they were operating in the same industry. The earlier reason that has been provided to this scenario is the ability of the management teams in respective hotels to come up with distinctive management resource management practice in their particular areas. According to David Ricardo, possession of superior competencies in resource management through proper allocation will continue giving their companies upper hand in competitive advantage. Perhaps this is because it leads to economical utilization of the company resources. Finally, stakeholder analysis is a management strategy that takes into account the interests of the hotel industry. The key stakeholders in the hotel industry include: the government, the owners of business, the employees, the suppliers, the competitors and above all the business customers. According to the Fortune magazine, various businesses in the hotel industry are on the run to establishing networks with other partners, creating flexibility at workplace for the employees, outsource technical services and also enter into website communication to connect and reach more potential customers. The objective of applying the stakeholder approach, is to make sure that business players are well connected and variety of strategic alliances as well as cross-branding with other partnerships (Bayraktaroglu and Kutanis 2003, pp. 189). 3.2 Employee empowerment through training and development Empowerment is a management tool that is used to help make employees good decisions and be responsible in situations that need demand for their own actions. According to Pastor (1996) empowerment is related to how management facilitates and works towards ensuring that employees are supported to perform their functions independently. Empowerment as a management tool helps create an environment where the employees are allowed to work as individuals and also participate actively in team roles in order to achieve the common goals of the company. This management tool for example can be demonstrated in a situation where the employee directly interacts with customer directly. At this point, the employee is empowered to determine the best strategy he can apply to meet the customer needs. Also empowerment management technique is used to encourage the development of positive relationships with fellow workers and extend it to the guests who come into the hotel. However, for empowerment to work effectively, the management has to introduce a good policy on employee training and development. This can be done purposely to enhance employee skills in determining what is expected of them based on facts and knowledge. 3.3 Cost management The process of managing costs is also considered very critical in the hotel industry. This is because it is through good cost management practices that the hotel can be able to break-even. Numerous expenses are normally committed in the hotel industry. Expenses such as insurance bills, labor cost and do not stop from occurring even when the business is performing very poorly. It is because of this regard that many companies that are running hotels are seeking ways to redouble their efforts towards controlling and managing them to their minimum low. Some companies go as far as hiring the services of expertise in managing their expenses. Technology is also being employed to do transactions online and therefore reduce the costs that arise from doing business operations manually (Lashley 2001, pp 67). 4.0 The methodology approach This part of the report, discusses the tools and procedures the author used to collect the relevant information with regard to the success of operations management theories, tools and techniques in the hotel industry. There are approaches that the author could have used to gather material and relevant data with regard to this topic which may include primary and secondary sources. Primary methods involve use of different tools such as questionnaires, interviews, surveys and simulation to collect data. Primary methods allow the author to collect non-existent data about a particular problem. The advantage with this method is that it gives the researcher the opportunity to exercise his authority in carrying out the study and it provides the most current trend in the performance of hotels. However, the author in this case chose to use the secondary source to collect relevant information on the topic (Bayraktaroglu and Kutanis 2003, pp. 189). Secondary method entails the use of already existing data and literatures from various scholars and studies to compile this report. In this case, the author had decided to use information about different case studies to demonstrate how management theories, tools and techniques have been successful in the hotel industry. The advantage with this methodology is that it allows the author to access a variety of sources of information to support his arguments and conclusions. In this case the methodology applied, proved to be faster and time saving. 5.0 Results 5.1 Case 1: The “Heavenly Bed” Business brand name The hotel was established by Westin brand of Starwood Hotels and Resorts. The management technique that the hotel has taken is to transform the bed which is a common feature of any hotel into becoming a very brand name. This is to demonstrate how the hotel’s rooms are luxurious of high level of comfortability. This was done particularly to attract more customers in order to generate more revenues for the business. This management process began after extensive consumer analysis, market environment analysis and product testing. The results from over 600 business executives, of which 84% agreed that making the rooms more luxurious will attract more customers with 63% of them agreeing that a good night is the most precious service that a hotel can offer for the customer (Connolly and McGing 2007, pp. 211). Working on these findings, the hotel management decided to apply different decorations in the rooms to fit various customers’ preferences from all walks of life. This demonstrate of the operations management tool that is based on service delivery by an hotel and how it can be successful in marketing the business and making more profitable. 5.2 Case 2: The Marriot Hotel-Management of resources The Marriot Hotel is one of the most prosperous hotels in the United States. Its growth and rapid expansion in the industry, has been attributed to its high level of competence in managing its resources. For example, the company’s effort has doubled its effort in making sure that its services cannot be easily duplicated by any other hotel in the industry. First and foremost, it’s his ability to put in place proper financial controls. It is argued that when Marriot enters into a project, its estimates for the project are almost exact meaning the company’s resource wastages are very minimal (Connolly and McGing 2007, pp. 201). This is an important cost management model. In addition, the company has a distinctive feature in providing customer service. This is demonstrated in the processes the company applies to recruit, hire, train and develop its employees. Finally, the company allows free interaction between the employees and the customers as a tool for managing customer relationships. 5.3 Case 3: Diamond and Trump-partnership Deborah Vitale, who is the CEO and president of the Diamonhead Company, demonstrates on how she believes in Joint ventures. Vitale is of the view that by partnering with Trump Entertainment Resorts, their hotel will be able to provide an ideal value to its customers based on the Trump Brand. The purpose for partnering Trump Entertainment is to have a strong brand for marketing its business based on the fact that Diamonhead is geared towards establishing a new retail restaurant at the Gulf Coast market. As a response by James Perry the president and CEO of Trump Entertainment, “working with partners, will help the company develop its brand in the area” and “this will create the opportunity for the business to work with other key partners in the Gulf Coast.” This is an operation management technique that demonstrates how partnerships can help hotels expand their business in new markets (Bayraktaroglu and Kutanis 2003, pp. 209). 6.0 Discussion of results Management theories, tools and techniques provide a firm ground for developing good business strategies. This report has covered extensively various theories, tools and techniques used in the hotel industry. First and foremost, branding of the hotel is considered very critical in the success of the business. As seen in the case of Starwood Hotels and Resorts, branding can be used to communicate a lot about the hotel. For example labeling Starwood Hotels and Resorts as ‘Heavenly Bed,’ has helped increase the number of executive business customers for the Hotel. This has directly translated into increased revenues. Apart from building a strong brand, the company has also gone further to transform it to customer service. This has been demonstrated by the company’s ability to design the rooms in differently as per the values of the customers in individual cities in order to meet their desires. According to the case of Marriot Hotel, it’s evident that good management of company resources can help transform the company positively to meet its bottom-line. The company has managed to put in place internal controls that cannot be easily copied by the competitors. This is particularly demonstrated on the ways in which the company manages its financial resources. The company’s ability to prepare almost accurate budget schedules for its projects has helped it minimize wastage of its resources which can otherwise be used for other purposes. Finally, the company’s internal process and management practices that allow for competitive hiring of new employees has enabled the company develop a very able workforce for competitive advantage. The company has gone further to allow for direct interactions between employees and the customer as part of its strategy to manage customer relations. This is very critical in enhancing the customer’s confidence on the company. Lastly, partnerships not only in the hotel industry but almost in every industry, allow business to combine their resource for a common goal. This has been demonstrated in the case of the partnership between Diamonhead and Trump Entertainment. More importantly, joint venture as a managerial tool allow business expand and build their brands in new markets as seen from these case where the two hotels wanted to venture into Gulf Coast market. In general, partnering is management technique that can be used to enter a new market area and make use of one’s brand to develop one’s own. 7.0 Conclusion Management theories, tools and techniques cannot be underestimated. This is because of their crucial role in helping the dealers in the hotel industry to bear with stiff competition. It is through these operations management practices would help the hotels to break-even and create value for its investments. More important point to note from this report is that different tools can be used differently by different companies based on the prevailing conditions. For example partnership is more appropriate when two or more companies have a common interest and a goal to achieve. On the other hand management of company resources becomes very critical when a hotel is not able break-even and making losses. Employee training and development and use of appropriate technology have also been identified as some of the managerial practices that can make a company succeed. In addition, to this, branding of the business should also be linked directly with the actual customer service delivery for the brand to grow and become even stronger. 8.0 Recommendations 8.1 Brand name There is need for various hotels to persistently embark on building strong brands. This is the only way the company be assured of increased market share and growth. A strong brand will mean a good number of loyal customers. The reason the management should focus their efforts towards brand building is to do away with some of the expenses that are associated with frequent product promotions and advertisements. In addition, it’s easy to serve existing customers rather than new ones and therefore a strong brand is of significance in the hotel industry (Cline 2001, pp. 64). 8.2 Joint venture There is also need for various hotel management teams to recognize the importance of collaborations and joint ventures with other companies. As a management tool, joint ventures allow easy access to venture capital, increased sharing of risks, resources, specialized services and technology for better service delivery (2005, pp. 167). 8.3 Cost management In almost every hotel, cost element carries significant importance. Therefore there is need to apply all strategies available at the company’s disposal to make sure that all of the company’s revenues are not spent on meeting the company expenses. It may look tedious for any company to track and record all transactions but this is a command for any company that may be interested in boosting its profits and create value the stakeholders’ investment (Cline 2001, pp. 24). 8.4 Employee training and development Finally, there is need for every company to take into consideration the role played by the employees in building the best. The employees have more one on one contact with the customers than any other person. This therefore demands that as part of management practices, employee training and development be given priority in making sure that they have appropriate skills and knowledge required to serve customers according to Failte (2005, pp. 123). References Bayraktaroglu, S and Kutanis, RO 2003, Transforming hotels into learning organisations: A new strategy for going global, Journal of Tourism Management, Vol. 24, Issue. 2, pp 149-154. Cernat, L and Holmes, P eds. 2004, Competition, competitiveness and development: lessons from developing countries, United Nations, UNCTAD/DITC/CLP/2004/1, New York and Geneva. Cline, R 2001, The future of hospitality e-business: how the Internet has changed the hotel industry, Lodging Hospitality, vol. 57, no. 7, pp. 24–30. Connolly, P and McGing, G 2007, High performance work practices and competitive advantage in the Irish hospitality sector, International Journal of Contemporary Hospitality Management, vol. 19, no. 3, 2007, pp. 201-210. Failte I 2005, A Human Resource Development Strategy for Irish Tourism: Competing Through People, Failte Ireland, Dublin. Israeli, A, Barkan, R and Fleishman, M 2006, An Exploratory Approach to Evaluating Performance Measures: The Manager’s Perspective, The Service Industries Journal, vol. 26, no. 8, pp. 861-872. Lashley, C 2001, Strategies for Service Excellence, Elsevier Butterworth Heinemann, Oxford. Read More