Part 1 Unit 1 Introduction and Overview Strategy for Tourism.

Part 1Unit 1Introduction and Overview

Strategy for Tourism

Module Aims

The aim of the module is to provide an opportunity for students to understand, apply and critically evaluate strategic analysis for tourism organisations and destinations. The examination and analysis of particular tourist organisations and destinations will provide a basis for understanding and critically evaluating the factors that can contribute to successful strategy. Students will be able to evaluate strategies, their appropriateness and the issues that will determine whether or not they are successful.

Module Outcomes

Intended Learning OutcomesOn successful completion of this module

the students will be able to:understand the theory and practice of strategy

in tourismdevelop appropriate strategies based on

critical situational analysisprovide an evaluation of the strategies

pursued in different tourist contextsidentify and evaluate the critical success

factors

There are 12 units in this module

Part 1 Strategic Purpose1. Introduction to strategy2. Mission and purpose3. Culture and strategy

Part 2 Strategic Analysis1. The external

environment: PEST2. The external

environment: Competition

3. The internal environment: Capability

Part 3 Strategic Choice7. Strategic options8. Strategic direction and

methods9. Strategic evaluation

Part 4 Strategic Implementation10.Organising and

resourcing11.Managing and

monitoring12.Strategy in action

Reading

Book Ch

Tribe, J, (2010) Strategy for Tourism, Goodfellow Publishers, Oxford.

1

Capon, C. (2008) Understanding Strategic Management, Prentice Hall: Hemel Hempstead.

1

Tribe, J. (2005) The Economics of Recreation, Leisure and Tourism, Butterworth Heinemann, Oxford.

-

Johnson, G., Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy, Prentice Hall: Hemel Hempstead.

1

Part 1: Introduction

Unit 1 provides an introduction to the subject and introduces a framework for examining the whole strategy process based around four key component parts of the strategic process: strategic purpose strategic analysis strategic choice strategic implementation

These four areas in turn provide the headings for the four parts of this book.

Unit 2 examines in detail the concept of strategic mission. It analyses the aims and purposes of tourism entities and introduces the idea of stakeholders.

The relationship between culture and strategy is investigated in Unit 3

Unit 1 Objectives

After studying this unit and related materials you should be able to understand:the meaning of strategythe process of strategythe importance of strategythe contexts and uses of strategy in tourismcompeting approaches to strategy

and critically evaluate, explain and apply the above concepts.

Case Study 1: The Tourism Strategy for New Zealand

Case Study 1: The Tourism Strategy for New Zealand The New Zealand Tourism Strategy 2015 is

guided by its vision statement:“In 2015, tourism is valued as the leading contributor

to a sustainable New Zealand economy”. But a vision needs unpacking into more specific

outcomes and for NZTS 2015 these are:“New Zealand delivers a world-class visitor experience New Zealand’s tourism sector is prosperous and

attracts ongoing investmentThe tourism sector takes a leading role in protecting

and enhancing the environment The tourism sector and communities work together for

mutual benefit”

Strategic Planning: The Elements

There are four key elements of corporate strategy:Strategic purposeStrategic analysisStrategic choice, and,Strategic implementation

Strategic Purpose

This is often defined by an organisation’s mission which includes:what the organisation is trying to achievewhat its purpose or aim iswhere it is trying to head for in the medium

to long term.

Mission is influenced bystakeholdersculturenature of business

NZTS 2015

In the case of NZTS 2015 the mission (in this case called vision) is that:“In 2015, tourism is valued as the leading

contributor to a sustainable New Zealand economy” (p. 5)

Key contributors to NZTS 2015 The Tourism Industry AssociationThe Ministry of TourismTourism New Zealand

Strategic Analysis

This involves consideration of the major influences upon the organisation's success in terms ofResources (capability), andOperating environment

Strategic analysis is concerned with analysing the strengths and weaknesses of an

organisation’s internal resources and the opportunities and threats posed by its

external operating environment.

NZTS 2015

NZTS 2015 identifies four significant threats in its external environment. The impact of travel on climate change. The greater use of IT by consumers. The trend towards higher fuel prices. The the highly competitive nature of

tourism destinations

Strategic Choice

This is concerned withgeneration of strategic options evaluation of strategic options, and,selection of strategy

NZTS 2015

The strategic option favoured by NZTS has moved from mass tourism (where price is a major consideration) to quality / differentiated tourism (where visitor and host experience is a major consideration).

The “100% Pure New Zealand” brand (p. 10) remains a central part of the strategy The following link shows the TV “100% Pure”

for New Zealand http://www.youtube.com/watch?v=9sEZ-wdFegU

Strategic Implementation

This is concerned with:resource planningorganisational structurelogistics and implementation timetabletimetable for implementationmonitoring and review

NZTS 2015 Performance Targets “Increasing visitor satisfaction

TARGET: Increase by four percentage points the number of international travellers who rate their overall experience of New Zealand as eight or more on a 10–point scale…

Increasing the amount visitors spend TARGET: Increase the average amount that visitors spend per

night from $130 to $160 by 2015. Reducing seasonality

TARGET: Increase the number of international visitors who arrive in the shoulder season … at a rate that is 25% faster than the overall annual forecast growth rate every year between now and 2015…

Delivering environmental best practice We must develop ways of measuring the amount of carbon

emitted by the tourism sector … We must develop ways of measuring how satisfied visitors are

with New Zealand’s environment performance. Creating positive community outcomes

We must develop ways of measuring how local government accommodates and promotes tourism and how residents feel about the tourism activities taking place in their communities.”

What is strategy? Some definitions: 1

"Strategy is the direction and scope of an organisation over the long term: ideally, which matches its resources to its changing environment, and in particular its markets, customers or clients so as to meet stakeholder expectations." (Johnson and Scholes, 2008)

What is strategy? Some definitions: 2

" A strategy is the pattern or plan that integrates an organisation's major goals, policies and action sequences into a cohesive whole." (Quinn, 1998)

"Five definitions of strategy are presented... - as plan, ploy, pattern, position and perspective." (Mintzberg, 1998)

What is strategy? Some questions

A strategy needs to address the following questions:where are we trying to go?how can we get there?how do we know if we've got there?

Working definition of strategy:"the planning of a desirable future and the

design and testing of suitable ways of bringing it about".

Characteristics of strategic decisions

They are: are complex rather than simpleare integrated rather than isolatedare long term rather than short termare proactive rather than reactivehave an impact on the whole rather than a part of

the organisationinvolve major rather than minor changeinvolve grand design rather than marginal tinkeringare made by those in positions of power in the

organisation rather than subordinates

Scope of corporate strategy for tourism

Tourism Profit-making organisationsNGOsGovernment OrganisationsNTOsDestinationsMaster PlansSpecific goals – e.g. climate changeMega projects and Events

The importance of strategy

Avoid Strategic DriftSurvive Turbulent EnvironmentsAvoid Organisational FragmentationProvide Co-ordination

Avoid Strategic Drift

time

change environment

H

J

K

L

1 2

F

G

0

strategic drift

organisationtourism

Survive Turbulent Environments

Avoid Organisational Fragmentation

Co-ordination Strategy

A national, regional or local tourism strategy often works to co-ordinate al the disparate players in the tourism economy

Strategy as a prescription vs the contested approaches

Strategy as prescriptionThis grouping of approaches including the classical

approach believes that a strategy can be formulated using knowledge about an entity’s situation and that the strategy can be effectively put into action.

The contested nature of strategiesOther approaches underline the messiness of the

world that entities operate in, the difficulties of obtaining correct knowledge, the sometimes overwhelming power of the external environment on entities and the effects of humans on the whole process.

Review of Key Terms

Strategy: The planning of a desirable future and the design and testing of suitable ways of bringing it about.

Four key elements of tourism strategy: strategic purpose, strategic analysis, strategic choice and strategic implementation.

Strategic drift: When an entity has failed to monitor and keep pace with its changing external environment.

Turbulent Environments: Dynamic, diverse, difficult and dangerous.

Fragmentation: When the constituent parts of an entity do not serve a common goal.

Competing Approaches to Strategy: Strategy as prescription vs the contested nature of strategies.

Case Study: BAA

1. The following link is an interview is with BAA Chief Executive Officer Stephen Nelson (2007)

http://www.baa.com/annualreview07/ceo_message/

What aspects of strategy are illustrated in this interview?

Review Questions 1

1. Define the term strategy in your own words. Use examples, explain the essential features which distinguish a strategy from similar concepts and use counter-examples to clarify what strategy is not.

2. Explain the relevance of the terms strategic drift, turbulent environments and organisational fragmentation to a named tourism entity.

3. Map out the four key elements of strategy for a named tourism entity.

4. Explain, using examples, what Mintzberg (1998) meant when he described strategy as "plan, ploy, pattern, position and perspective". Do you think his definition is an appropriate one?

5. What factors can make strategy a contested concept?

Case Study: Ryanair

Review Questions 2 Read the following strategy statement

for Ryanair (or find alternative) http://www.ryanair.com/site/about/invest/docs/Strategy.pdfand answer the following questions: What is a strategy? What are the key elements to a Ryanair’s

strategy? How is Ryanair’s strategy different to that

of BA and which is the most successful?

Ryanair

Below is a link to a presentation showing strategic data for Ryanairhttp://www.ryanair.com/doc/investor/2009/I

nvestor%20Day%202%20Oct%202009.pdf

This is the presentation about Ryanair given to investors in the company

Unit 1Introduction and OverviewThe End

Strategy for Tourism