BHMS4647

Hospitality Management and

Development

│ Lecture 3│

Strategic Considerations

BHMS 4647 Hospitality Management and Development Dr. Bruce Tsui Lecture 3 1
 Learning Outcomes
By the end of the class, students should be able to:
 define and apply strategic management in global
business environment
 use Porter’s five forces model with SWOT and PEST
analyses to formulate strategy
 discuss the business challenges, organizational
responses, and training program responses associated
with transnational, global, and multinational
organizations

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 How would you define
“strategic
management”?

How important does

strategic management to
business planning?
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 Strategy and Strategic Planning
 Strategy is “the way to gain and keep
customers; tactics are the step-by-step”
processes
 Strategic planning tells us how to go from
where we are now to where we want to be
 Strategic planning is known as environmental
____________________
 In most firms, strategy usually does not filter
down to all levels of management

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 Strategic management

 “a set of managerial decisions and actions that

determines the - performance of a
corporation” (Wheelen and Hunger, 2004)

 A key managerial concept to modern

enterprises’ survival and development

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 Strategic planning process

Mission and goals

Environmental scanning and strategic choice

Strategy formulation

Corporate Global Business Functional

level level level level
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 Mission and objectives
 Organizational mission
 The purpose for which or the reason why
an organization exists
 A company’s mission statement can focus,
direct, motivate, unify a business into
superior performance
 Objectives
 Reflect and flow naturally from an
organizational mission

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 Mission and objectives (cont’d)
 Objectives
 Normally fall into the areas of marketing,
finance, profitability, performance and
development
 Market volume and profitability are
usually higher priority for international
entities due to the higher risk involved

BHMS 4647 Hospitality Management and Development Dr. Bruce Tsui Lecture 3 8
 Environmental Analysis
 Environmental scanning
 To monitor, evaluate and disseminate
information from external and internal
environments to key people within the
corporation
 Various level of scanning
 Multinational – Worldwide trend global
 Regional – a group of countries
 National – size and nature of market
BHMS 4647 Hospitality Management and Development Dr. Bruce Tsui Lecture 3 9
 Hospitality Environment
 To help recognize the current situation of the
surrounding competition
 To assist in developing appropriate decisions for
strategies and tactics
 To have a more swift and higher flexibility in
adapting the ___________________ environment
 --------------------------------------------------------------
 Flawed and inadequate data  -ve
recommendations
 i.e. wrong ‘new business’ focus
 i.e. wrong ‘location’ focus

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 SWOT

 Two assessing criteria

 The degree of control that managers
within an organization can hand over them
 Factors that help or prevent the
organization for achieving its objectives

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 SWOT
Factors which help Factors which
organization to prevent
achieve its organization to
objectives achieve its
objectives
Internal factors
under the control
Strengths Weaknesses
of the organization
managers

External factors Opportunities Threats

not under the
control of the
organization
managers

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 Industry analysis forces

Source: businessgoonline.com

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 Internal Analysis: Competitive advantage
 Efficiency
 Innovation
 Quality
 Customer responsiveness

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 Corporate value chain analysis

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 Corporate level strategy
 Horizontal integration
 Expand activities into other geographic regions /
increase the range of products and services
 Vertical integration
 Take over supplier / distributor
 Strategic alliances
 Partnership to achieve mutual benefits
 Diversification
 Into related or unrelated industries

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 Global level strategy
 International strategy
 transfer skills and products to foreign
markets
 Multidomestic strategy
 customize products and strategies
 local offices tend to have a great deal of
autonomy and freedom

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 Global level strategy
 Global strategy
 focus on reaping the cost reductions
 Transnational strategy
 involves a simultaneous focus on reducing
costs, transferring skills and products, and
local responsiveness

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 Business level strategy
 Cost leadership strategy
 producing goods and services at a lower
________
 Differentiation strategy
 a product or service offered to be unique
in some way
 Focus strategy
 compete for a particular _________

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 Functional level strategy
 Identify business unit’s core competencies
 Ensure that competencies are continually
strengthened
 Manage competencies so that competitive
advantage is preserved

 Outsourcing?

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 Portfolio analysis
 Business growth
 Competitive position

 Stars
 Cash cows
 Question marks
 Dogs

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 Transnational, Global and Multinational
Organizations
 Transnational firm operates on a global scale
but permits each property to develop in its
own right according to local market needs
 Global hotel operators consider a single
market in the world with standardized,
reliable, branded properties, and all countries
are the same
 Multinational ones use successful flagship
hotels to provide ideas for new properties in
other countries (domestic to international)
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 Transnational
Business • Develop local markets with global resources
Challenges • Capitalize on mutual learning and shared goals
between HQs and foreign operations

Organizational • Global strategy with local operations

Response • Teamwork, shared responsibility, informal
organizations relationships

Training • Develop peoples’ ability to innovate

Program • Empower entire organization
Response

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 Global
Business • Operate on a global scale, deliver identical
Challenges products with standardized world-class quality
• Scale up for global markets with global
resources

Organizational • Global strategy with centralized operations

Response • Homogenous decision-making, single strategy
for the world

Training • Develop an overall operational effectiveness

Program • Focus on consistency and development of
Response techniques

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 Multinational
Business • Expand domestic market to worldwide
Challenges business
• International organization learns from
domestic operations

Organizational • Build up organization in international

Response locations
• Transfer domestic strategies to international
situations

Training • Develop efficiency and pursue growth

Program • Help international operate more like domestic
Response organization

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 Do Porter’s five forces
operate the same way
in hospitality?

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 References
 Clarke, A. and Chen, W. (2007). International
Hospitality Management: Concepts and Cases.
Taylor and Francis Group, Chapter 4, 7
 Chuck, G. (2008). International Hotel Development
and Management. Educational Institute of the
American Hotel and Lodging Association, Chapter 3,
5

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