External Trends

Topics: Strategic management, Management, Decision making Pages: 5 (1230 words) Published: November 9, 2011
Decision Making For Hotel & Restaurant Managers
Define the term environment in this context.
We say that strategic managers within organisations must consider environmental influences before arriving at business decisions; discuss what these environmental forces are and how they would impact on the decisions made by strategic management on the future viability of the business. As well as this, do a brief analysis of the 5 forces driving competition in the hospitality industry using Porters model as the basis of your analysis. If there is a question: ”What must be considered for managers in the first stage of business decision making?”, one of the component elements included in the right answer definitely is analysing the external environment of the organization. As Dess commented (2008, p.37), “Strategies are not and should not be developed in a vacuum. They must be responsive to the external business environment”. Especially in hospitality – a service-based industry, the term “external environment” is extremely important cause the products are intangible, which are dedicated according to the markets’ demands. This paper will base on a concise definition of the term “environment” in hospitality in order to give a view in details of the common environmental forces as well as how they affect the business that drive the decisions made to adapt to the environment. External environment can be simply defined by everything outside an organization that can influence its present and future. According to Davidson (2009), there are two layers composing the external environment of an organization, which are general (or macro) environment and task environment. While the general environment includes all major impacts at the industry level namely economic, demographic, technological, socio-cultural, political-legal, and international trends; the task environment contents the relevant forces at the level of individual, which directly affect the organization’s activities such as customers, competitors, suppliers, regulators, strategic allies(Kew, p.1,2005). In the view of strategic management at industrial level, hospitality managers should consider current specific trends occurred in the macro environment. Firstly, economic trends always play the major role in every business’ development. Illustratively, the economic downturn made 2009 became a rough year for hoteliers caused by increased inflation, high unemployment rate, and decreased consumer spending. This situation confronted hoteliers with decision made that whether they should continue funding and investing or not. Another dimension that also considerably affects the hospitality industry is technological trends. Reid (2009, p.559) suggested that “Many of new technologies in the hospitality and tourism industry are intended to improve the efficiency of firms, thereby reducing costs”. His example illustrated that hotels and airlines do maximize their revenues through price setting by using sophisticated systems to capture costs and demand. Moreover, together with the rapid development of information technology, the informational demand become higher and more complex that result the advanced reservation systems, modern management software –which managers should keep abreast with. The tendency of globalization in hospitality and tourism industry keeps growing that causes the international trends together with political and legal trends influencing the hospitality organizations. Therefore, managers at this stage are face to the options of which direction their business would grow and compete –internationally or locally. When the decision has been made, they then have to concern about the political and legal changes. “All levels of government have a tremendous impact on the operation of hospitality and tourism firms throughout the country”, stated by Reid (2009, p.559). Additionally, socio-cultural and demographic trends give manager useful information for their target markets...
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