Industry seminar - strategic management.docx

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Assignment answers

1. What do you understand by „mission‟ and „vision‟? Explain the

differences and why are they necessary at the starting point in the

process of formulating a strategy?

Vision Statements and Mission Statements are the inspiring words chosen by

successful leaders to clearly and concisely convey the direction of the organization.

By crafting a clear mission statement and vision statement, you can powerfully

communicate your intentions and motivate your team or organization to realize an

attractive and inspiring common vision of the future.

"Mission Statements" and "Vision Statements" do two distinctly different jobs.

A Mission Statement defines the organization's purpose and primary objectives. Its

prime function is internal – to define the key measure or measures of the

organization's success – and its prime audience is the leadership team and

stockholders.

Vision Statements also define the organizations purpose, but this time they do so in

terms of the organization's values rather than bottom line measures (values are

guiding beliefs about how things should be done.) The vision statement communicates

both the purpose and values of the organization. For employees, it gives direction

about how they are expected to behave and inspires them to give their best. Shared

with customers, it shapes customers' understanding of why they should work with the

organization.

While a business must continually adapt to its competitive environment, there are

certain core ideals that remain relatively steady and provide guidance in the process of

strategic decision-making. These unchanging ideals form the business vision and are

expressed in the company mission statement.



Company Vision is What a Company Wishes to become or aspire to be.

The mission statement describes the company's business vision, including the

unchanging values and purpose of the firm and forward-looking visionary goals that

guide the pursuit of future opportunities.

MISSION STATEMENT

1. To create your mission statement, first identify your organization's "winning

idea".

2. This is the idea or approach that will make your organization stand out from its

competitors, and is the reason that customers will come to you and not your

competitors

3. Next identify the key measures of your success. Make sure you choose the

most important measures (and not too many of them!)

4. Combine your winning idea and success measures into a tangible and

measurable goal.

5. Refine the words until you have a concise and precise statement of your

mission, which expresses your ideas, measures and desired result.

VISION STATEMENT

1. First identify your organization's mission. Then uncover the real, human value in

that mission.

2. Next, identify what you, your customers and other stakeholders will value most

about how your organization will achieve this mission. Distil these into the

values that your organization has or should have.

3. Combine your mission and values, and polish the words until you have a vision

statement inspiring enough to energize and motivate people inside and outside

your organization.



Guided by the business vision, the firm's leaders can define measurable financial and

strategic objectives. Financial objectives involve measures such as sales targets and

earnings growth. Strategic objectives are related to the firm's business position, and

may include measures such as market share and reputation.

Core Ideology: Is the unchanging part of organization. It is the character of an

organization, this would not change for a longer time even it were disadvantage.

Core Values: The core values are a few values (no more than five or so) that are

central to the firm. Core values reflect the deeply held values of the organization and

are independent of the current industry environment

Core Purpose: The core purpose is the reason that the firm exists. This core purpose is

expressed in a carefully formulated mission statement. Like the core values, the core

purpose is relatively unchanging and for many firms endures for decades or even

centuries. This purpose sets the firm apart from other firms in its industry and sets the

direction in which the firm will proceed

Envisioned Future: Are the goals to be reached. It is classified into:

Audacious Goals: These are the goals that the company would like to achieve.

They are tough needs extraordinary commitment and effort.

Vivid Description: These Goals are put into words that evoke a picture of what it

would be like to achieve the Audacious Goals.

Vision/Mission

CoreIdeology

Core ValuesCore

Purpose

EnvisionedFuture

AudaciousGoals

VividDescription



Example of Coca-cola company vision and mission strategy

OUR MISSION:

Our mission declares our purpose as a company. It serves as the standard against which weweigh our actions and decisions. It is the foundation of our Manifesto.

(1) To refresh the world in body, mind and spirit.

(2) To inspire moments of optimism through our brands and our actions.

(3) To create value and make a difference everywhere we engage.

OUR VISION:

Our vision guides every aspect of our business by describing what we need to accomplish in

order to continue achieving sustainable growth.

People: Being a great place to work where people are inspired to be the best they can be.

Portfolio: Bringing to the world a portfolio of quality beverage brands that anticipate and

satisfy people's desires and needs.

Partners: Nurturing a winning network of customers and suppliers, together we create

mutual, enduring value.

Planet: Being a responsible citizen that makes a difference by helping build and support

sustainable communities.

Profit: Maximizing long-term return to shareowners while being mindful of our overall

responsibilities.



IMPROVED MISSION STATEMENT:

(1) At Coca Cola we're committed to achieving business and financial success while

leaving a positive imprint on society – delivering what we call Performance with

Purpose.

(2) Our mission is to be the world's premier consumer Products Company focused on

convenient foods and beverages. We seek to produce financial rewards to in8vestors

as we provide opportunities for growth and enrichment to our employees, our

business partners and the communities in which we operate. And in everything we do,

we strive for honesty, fairness and integrity.

IMPROVED VISION STATEMENT:

(1) Coca cola Co responsibility is to continually improve all aspects of the world in which

we operate – environment, social, economic – creating a better tomorrow than today."

(2) Our vision is put into action through programs and a focus on environmental

stewardship, activities to benefit society, and a commitment to build shareholder

value by making Coca cola Co a truly sustainable company.

Why it is improved:

There is It is our vision to be the best and leading provider of food and beverage

products in Malaysia, to facilitate the people of Malaysia and we emphasis on

consumer more rather than competitors we among the top ten food and beverage

companies in the world, by continually challenging present conventions and always

staying a step ahead of the competition.

It is our mission to be the number one food and Beverage Company in Malaysia by

providing our customers with the highest product quality in terms of taste, experience,

and satisfaction. We will ensure this through an unwavering dedication to the

continuous development of our products and processes ensuring that we remain best

in class. We will strive to hire the most competent and dedicated employees whose

work ethic will set the standard in the industry. We will be paymasters, as we

strongly believe that human resource is the only asset that truly appreciates over time.



2. What do you understand by „pricing strategy‟? Discuss by

formulating a pricing strategy for a company, which is into fast food

sector.

Product line pricing strategies can be further complicated by competitive activity by

product, not exclusively by line. If you have five competitors for one of your products

in the line, and then only two competitors for the other products in the line, you might

use a different price strategy for the product with lots of competition, than the other

line products.

The challenge for businesses with this strategy will come from having too many

competitors in the market. If there are too many competitors, each with a full line of

products in the varying stages of the product life cycle, buyers will find it difficult to

make decisions based on quality or service or value for the price.

For new product in a new market, the cost mark-up is the most popular method. There

is no need to think about pricing at all, just simply add an amount of profit on top of

the cost and that is the final price. At first, the method may seem attractive but

eventually the sellers will find out that their profit is not up to their expectation, andthe customers are suspicious of the attractive price.

Pricing your product or service is one of the most important issues that you need to

tackle. You must be wondering as to what is the procedure to follow to develop the

best pricing strategy for your company. While there is no particular approach that you

must adopt, definitely, there are some important things that you should bear in mind

while creating one.

Other factors that affect your pricing strategy are the economics of your business.

Depending on the current situation of your business's performance, your mark-on has

to ensure sufficient profits to sustain your business. Sometimes, to increase your sales

volume, you can lower your mark-on to price selected merchandise.

http://www.sooperarticles.com/business-articles/strategic-management-articles/pricing-strategy-18114.html










PRICING STRATEGY

Premium Pricing.

Use a high price where there is a uniqueness about the product or service. This

approach is used where a a substantial competitive advantage exists. Such high prices

are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde

flights.

Penetration Pricing.

The price charged for products and services is set artificially low in order to gain

market share. Once this is achieved, the price is increased. This approach was used by

France Telecom and Sky TV.

Economy Pricing.

This is a no frills low price. The cost of marketing and manufacture are kept at a

minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Price Skimming.

Charge a high price because you have a substantial competitive advantage. However,

the advantage is not sustainable. The high price tends to attract new competitors into

the market, and the price inevitably falls due to increased supply. Manufacturers of

digital watches used a skimming approach in the 1970s. Once other manufacturers

were tempted into the market and the watches were produced at a lower unit cost,

other marketing strategies and pricing approaches are implemented.

Captive Product Pricing

Where products have complements, companies will charge a premium price where the

consumer is captured. For example a razor manufacturer will charge a low price and

recoup its margin (and more) from the sale of the only design of blades which fit the

razor.

Product Bundle Pricing.

Here sellers combine several products in the same package. This also serves to move

old stock. Videos and CDs are often sold using the bundle approach.



Promotional Pricing.

Pricing to promote a product is a very common application. There are many examples

of promotional pricing including approaches such as BOGOF (Buy One Get One

Free).

Geographical Pricing.

Geographical pricing is evident where there are variations in price in different parts of

the world. For example rarity value, or where shipping costs increase price.

Value Pricing.

This approach is used where external factors such as recession or increased

competition force companies to provide 'value' products and services to retain salese.g. value meals at McDonalds.

Pricing Stategy From Burger King

Pricing in an extremely pertinent aspect of the fast food industry. The research

conducted was able to compare the Dollar Menu offered at McDonald‘s versus the

Value Menu featured at Burger King. The research team was surprised to hear that

everyone thought that the Value Menu was more expensive than the Dollar Menu.This was probably the largest shock of the research process. The Dollar Menu and

the Value Menu are virtually the same, except college students perceive the Dollar

Menu to be cheaper. A few minor changes could be made to ensure the college-age

segment chose the Value Menu over the Dollar Menu, which will be one of the

focuses of the quantitative research. Many of the respondents believe that Burger

King should offer Rodeo burgers, double cheeseburgers, shakes, chicken nuggets

and any type of chicken sandwich to the Value choices to really ―beef‖ the menu up.

Burger King promotions and advertisement methods need to be mentioned. Earlier,

it was stated that ―The King‖ is greatly approved by college students and is a

positive tool for Burger King. A couple of the interviewees want Burger King to

bring back the football commercials featuring the King. There was an overall

consensus that Burger King did not advertise enough, or the advertisements were

boring, for instance the whopper and whopper jr. commercials were not enjoyed.

The King has become quite popular in pop culture.



Lastly, there was a consensus among the students that they said they would not go

back to Burger King is the staff was unfriendly or rude. Also, someone found ―blue

veins‖ in her chicken nuggets, which now she find BK disgusting and will not go

back there. Most of the respondents said that the store conditions were actually

cleaner than other fast food restaurants.

Focus groups and in-depth interviews helped the research team understand their

target market, however if the process had to be repeated there would be a few things

that could be changed. A few respondents commented on the chicken nugget quality

and said that Burger King‘s crown shaped nuggets are so unappetizing that they do

not wish to go back there. The research team should have brought different types of

chicken fingers (without the branding) to the focus group and this would of created a

visual aid, so respondents could identify what they liked or disliked about each

chicken piece.

Burger King faces some difficult challenges. Key to its future success will be

maintaining its core strengths — an unwavering focus on quality and consistency —

while carefully experimenting with new options. These innovative initiatives could

include launching higher-end restaurants under new brands that wouldn‘t be saddled

with Burger King‘s fast-food image. The company could also look into expanding

more aggressively abroad where the prospects for significant growth are greater.

The company‘s environment efforts, while important, should not overshadow its

marketing initiatives, which are what the company is all about.



Example in “Good fast Food” Restaurant.

For pricing Good Fast Food will follow pricing strategy. Good Fast Food will sets an

initial high price And then slowly lowers the price to make the food available all level

of customers. The objectives of applying this strategy is to skin profit of the market

layer by layer.

Good Fast Food this pricing strategy will be effective with their target consumer

because they offer their food menu for specific segment that have the interest about

the something new and want to pay some extra for getting something innovative

different and extra ordinary.

Pricing & Cost Control

Competitive Pricing Model. Revenue calculations are based upon competitive price

comparisons and established menu values in the current marketplace. The following

are baseline assumptions on Average Check Totals, and Average Seat Turns:

Daily average for lunch spending is $9.50 per person, dinner at $2050 per person; and

$15.50 per person for After-Hours dining .Seat Turn averages are modestly estimatedat:

Year 1: After-Hours = 0.7, Lunch = 1.0, Dinner = 1.0



Cost Control. Cost of goods sold have been calculated as a percentage of sales and

will be monitored on a daily basis in order to keep Cost of Food within the range of 31 - 33%, and Cost of Drink & Juices below 9%. With a focus on Cost Control, we

anticipate 6 months to fine tune the restaurant operations and manage our costs within

the defined tolerance range.

Inventory turnover and Accounts Payable. Accounts receivable turnover is

calculated to be 0 days, as payment is rendered with service. Inventory is turned on a

7 day cycle as inventory is used daily within all categories, and accounts payable are

projected to be 30 days.



3. Assume that a group of investors are planning to open a 5 star hotel

somewhere in east of Malaysia. The hotel requires various functional

strategies to be adopted. List out the suggestion that you would like

to give them to plan and implement the functional strategies.

Customer satisfaction is at the heart of marketing. The ability to satisfy customer is

vital for a number of reasons. For example, it has been shown that dissatisfied

customers tend to complain to the establishment or seek redress from them more often

to relieve cognitive dissonance and failed consumption experiences.

Customer satisfaction is defined here in Oliver‘s (1997) terms: that it is the

consumer‘s fulfillment response. It is a judgment that a product or service feature, or

the product or service itself, provides a pleasurable level of consumption related

fulfillment . In other words , it is the overall level of contentment with a service/

product experience.

Buying influences on a traveler may, include satisfactory experience with a hotel,

advertisements by a hotel or chain, recommendations, hotel locations, and

preconceptions based on a hotel‘s name or affiliation.

Travel agents are also influential

The decision may be further influenced by the ease of making reservations and the

reservations agent description of the hotel and its rooms. Guests may be loyal to a

chain or property, and may be uncertain whether a change of brands will increase

their satisfaction. They may also recognize that repeat patronage may lead to greater

satisfaction of their needs.



The most important ingredient in a successful guest-relations effort is Top LevelCommitment. Hotel Managers who are committed to marketing;

Use strategies that focus on what is best for the guest.

Talk about service routinely. Use guest- friendly systems.

Exemplify all aspects of excellent guest relations as they interact with guests.

Balance high-tech with high-touch; that is, they temper systems and methods withthe personal factor.

Market service to their guests.

Measure service and make the result available to their employees.

Feasibility Study

1. Identifying Market Area Characteristics

This would include demographic information on potential guests in the generalarea of the proposed site, and it also analyses the positive and negative trendsthat may affect demand for the proposed facility.

Examples include types of guests, demographics, income, number of children.

2. Evaluating The Proposed Site

The site of a proposed food service facility is one of the most importantvariables determining the eventual success (or failure) of the operation.

The feasibility study evaluated the project site and area by researching thenumber of people

i) In the surrounding metropolitan area.ii) Living or working within walking distanceiii) Within easy driving distance.



3. Analyzing the competition

The competition analysis helps establish pre-opening marketing strategies for

the proposed food service facility. For example, the results of a feasibilitystudy can help determine;

a) The type and volume of demand for food and beverage service.

b) The adequacy with which the competition satisfies the current demand.

c) The strengths and limitations of the competition.

d) The points of difference that must be established between the proposed

facility and the competition.

4. Estimating Demand

Making an estimate of Food & Beverage demand begins with an analysis of the market area‘s restaurant and bar sales.

5. Projecting Operating Results

Most feasibility studies project financial results for the first, second and thirdyear of the operation.

6. Staying Current

Feasibility studies are usually conducted long before construction actuallytakes place (for newly constructed facilities) or a new operation is opened inan existing building.



a) Guest Surveys- A questionnaire completed by guests and used by Food

Service Managers to define current markets and to improve

the operation.

b) Guest Comment Cards- A short questionnaire completed by guests and used

by Food Service Managers to define current markets

and to improve the current markets.

Marketing strategy

For the best results, marketing objectives should be;

a) In writing. Everyone has the same information when objectives are put in writing.

b) Understandable. Objectives will not be reached unless managers and employeescan understand them.

c) Realistic yet challenging. Objectives should not be set so high that personnel giveup before they start; conversely, objectives should not be set so low that they

present no challenge.

d) Specific and measurable. Objectives must be as specific and measurable as possible.

Once the marketing objectives have been set, action plans with target dates must be created to reach them and employees should be encouraged to contribute ideasto action plan.

The major tools used to implement the marketing plan and reach marketing objectives

are sales, advertising and public relations and publicity (radio, television,direct

mail, newspaper & internet)



HOTEL DEPARTMENT

1. Rooms Division: In a statistics conducted by the U.S. Lodging Industry in 1995, it has

been shown that the majority of hotels revenues (60.2 %) are generated from Rooms

Division Department under the form of room sales. This very department provides the

services guests expect during their stay in the Hotel. Lastly, the Rooms Division

Department is typically composed of five different departments:

a) Front Office

b) Reservation

c) Housekeeping

d) Uniformed Services

e) Telephone

Beneath is a brief description of the different departments decomposing the Rooms

Division Department, along with their related main responsibilities:

a) Front Office:

Sell guestrooms; register guests and design guestrooms

Coordinate guest services

Provide information

Maintain accurate room statistics, and room key inventories

Maintain guest account statements and complete proper financial settlements

b) Reservation:

Receive and process reservation requests for future overnight accommodations.

With technology development, the Reservation Department can, on real time, access

the number and types of rooms available, various room rates, and furnishings, along with

the various facilities existing in the hotel



There should be close relation-ships with Sales and Marketing Division concerning

Large Group Reservations

c) Housekeeping:

Inspects rooms before they are available for sale

Cleans occupied and vacant rooms

Communicates the status of guestrooms to the Front Office Department

Cleans and presses the property‘s linens, towels, and guest clothing (if equipped to do

so, free of charge or for a pre-determined fee)

Maintains recycled and non-recycled inventory items

d) Uniformed Services:

Bell Attendants: Ensure baggage service between the lobby area and guestrooms

Door Attendants: Ensure baggage service and traffic control at hotel entrance(s)

Valet Parking Attendants: Ensure parking services for guest‘s automobiles

Transportation Personnel: Ensure transportation services for guests from and to the

hotel

Concierge: Assists guests by making restaurant reservations, arranging for

transportation, and getting tickets for theater, sporting, or any other special events

5. Telephone Department:

Answers and distributes calls to the appropriate extensions, whether guest, employee,

or management extensions

Places wake-up calls

Monitors automated systems

Coordinates emergency communications

‗ Protects Guest Privacy‗



2. Food & Beverage Department:

According to U.S. Lodging 1995 statistics, F&B Department constitutes the second

largest revenue generator of a typical hotel with an average of 23.1 for Food sales, and8.6 % for Beverage sales. In a five-star hotel, Food and Beverage outlets might have the

following forms:

Quick Service

Table Service

Specialty Restaurants

Coffee Shops

Bars

Lounges

Clubs

Banquets

Catering Functions Wedding, Birthdays…

3. Sales & Marketing Division:

A typical hotel should usually have Sales & Marketing division. However, if the staff

size, volume business, hotel size, expected group arrivals is low enough, the hotel might

have marketing staff placed under the reservation department (i.e. No need for a Sales &

Marketing Division).

A typical Sales & Marketing Division is composed of four different departments:

a) Sales b) Convention Servicesc) Advertisingd) Public Relations

4. Accounting Division:

The Accounting Division monitors the financial activities of the property. Some of the

activities that are undertaken in the Accounting Division are listed below:

a) Pays outstanding invoices



b) Distributes unpaid statementsc) Collects amounts owedd) Processes payrolle) Accumulates operating dataf) Compiles financial reports

g) Makes bank depositsh) Secures cash loansi) Performs other control and processing functions

5. Engineering and Maintenance Division:

This very department maintains the property's structure and grounds as well as electrical

and mechanical equipment. Some hotels might have this very division under different

names, such as maintenance division, property operation and maintenance department…

6. Security Division:

Security division personnel are usually screened from in-house personnel, security

officers or retired police officers, across certain physical skills, and prior experience.

Some of the functions of the security division are listed below:

a) Patrols the property

b) Monitors supervision equipmentc) Ensures safety and security of guests, visitors, and employees

7. Human Resources Division:

Some of the duties of the human resources division are listed below:

a) Responsible for external & internal recruitment b) Calculates employees' salaries, compensation, and tax withholding… c) Administrates employees' paperwork, monitors attendance…

d) Maintains good relations with Labor Unionse) Ensures employees' safety and working conditions



8. Other Divisions:

All the above mentioned departments and/or divisions should exist in a typical five-star

hotel; however there might be some revenue generators that are specific to certain hotels

but not existing in others. Below is a list of some possible extra or other divisions that

might exist in a hotel:

a) Retail Outlets (i.e.: Shops rented to outsiders or managed by the hotel) b) Recreation Facilities (ex: Fitness Center, Tennis Courts, and Cinema Saloons…) c) Conference Centersd) Casinos

The major functions conducted by the Rooms Division Department are:

a) Reservation, registration, room & rate assignment

b) Fulfills guest services and updates room status

c)

Maintains & settles guest accountsd) Creates guest history records

e) Develops & maintains a comprehensive database of guest information

f) Coordinates Guest Services

The sole priority of the Rooms Division Department shall be ensuring Guest

Satisfaction , which happens when, guest expectations match what the hotel provides.



In order to achieve Guest Satisfaction, front office department shall prepare:

a) Careful designed front office organization chart

b) Comprehensive goals, strategies and tactics

c) Planned work shifts

d) Well designed job descriptions

e) Well designed job specifications

The FRONT OFFICE is the nerve center of a hotel. Members of the front-office staff

welcome the guests, carry their luggage, help them register, give them their room keys

and mail, answer questions about the activities in the hotel and surrounding area, and

finally check them out. In fact, the only direct contact most guests have with hotel

employees, other than in the restaurants, is with members of the front-office staff.

The front office functions can be divided into five general areas:

1. reception

2. bell service

3. mail and information

4. concierge

5. cashiers and night auditors

6. Switchboard operator



Two major departments are represented in this list. The employees staffing the first four

areas are in the rooms department. The fifth is the financial area, where guest charges are

accumulated and posted to the bills, and all cash transactions are consummated. These are

all accounting-department functions, and so the cashiers and night auditors are in that

department.

The Front Office organization chart shall be designed according to Functions. Doing so

not only enhances the control the Front Office has over its Operations, but also provides

guests with more specialized attention. Such a division according to functions, however,

is not practical in middle and small size hotels due to the fact that these very hotels don't

posses enough and sufficient monetary resources to ensure the existence of at least 3

jobholders (i.e. one for each shift) for each job position. Therefore, in middle size hotels,

a front office clerk might be responsible for more than one work position. This is ensured

via cross training. On the other hand, in small size hotels, one or two front office clerk(s)

might be responsible for all front office activities.

A) Typical functions and positions under the Rooms Division Department:

Front Desk Agent : Registers guests, and maintains room availability information

Cashier : Closes guest folios, and properly checks out guests

Accounts Receivable Clerk : Posts charges in correct guest folios and updates folios'

outstanding balances

Night Auditor : Controls the job of the Accounts Receivable Clerk, and prepares daily

reports to management (ex: Occupancy Report and Revenue Report)

Mail & Information Clerk : Takes Messages, provides Directions to Guests, and

maintains Mail

Telephone Operator : Manages the Switchboard and coordinates Wake-up Calls



Reservation Agent : Responds to Reservation Requests and creates Reservation Records

Uniformed Service Agents: Handles Guest Luggage, escorts Guests to their Rooms, and

assists guests for any bit of information requested

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