HOSPITALITY STRATEGIC MANAGEMENT ASSIGNMENT – Alima Kassam INTRODUCTION
Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of the firm's objectives, nurturing policies and strategies to achieve these objectives, and acquiring and making available these resources to implement the policies and strategies to achieve the firm's objectives. Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as marketing, sales and production to achieve organisational goals. It is the highest level of managerial activity, usually initiated by the board of directors and executed by the firm's Chief Executive Officer (CEO) and executives. The success of a company is due to the awareness of the company of its external environment with the anticipated concerns, prediction of trends and generation of ideas. This automatically would lead to the identification of opportunities and threats, which are considered by managers as they strive to develop strategic direction and formulate and implement strategies. A leading scholar in strategic management, Michael Porter defines strategic management as “the scope of an organisation over the long term; which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations.” In essence, it is the environmental elements that need to be explored and identified to determine the business direction. Therefore, this process is defined by researching and identifying the strategic analysis, strategic direction, strategic formulation, strategic implementation and strategic evaluation effectively. The external environment can be divided into the operating environment and the organisational environment. The starting point for managers is to consider the macro-environment factors. Firstly, political factors must be considered. Governments enforce rules and regulations within which the company must operate, such as subsidies or lenient tax laws for new businesses. At the opposite end, governments can close companies that do not comply with the enforced laws. Therefore, compliance with the laws would prevent illegal activities for the company which promotes financial security and firm value. Secondly, economic factors play a great role in creating growth and profits for the stakeholders of a company, particularly with owners and customers. Critical factors include economic growth, inflation rates, credit availability, foreign exchange rates and inflation rates. Thirdly, socio-cultural factors or trends affect people according to their geographical region and can be important in a three-pronged way: they can create opportunities for companies by way of responding to the local community’s needs by offering gym facilities in a hotel. This would effectively create more business for the hotel by standing out of the crown with this differentiating factor to their business. Furthermore, baby-boomer couples who decide to have families later in life would enjoy higher standards. Therefore, a family-friendly cruise line would successfully respond to this demographical need. Awareness and compliance of society attitudes can assist a company to avoid problems where they would be perceived as a “bad corporate citizen”. Such examples could be where an organisation does not cater effectively for vegetarian eaters by including limited menu choices. Lastly, a positive reputation of a company amongst stakeholders such as customers and suppliers would increase the demand of its products and lead to increased opportunities. The fourth criterion is technological factors that play a vital role in a company’s operating environment. The recent technology boom has created new gadgets, services and...
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