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formal strategic planning in hospitality SME's

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Introduction

Essay 5A Critically evaluate the impact of formal strategic planning on the business performance of Hospitality SME's. Introduction "Marketing strategy is the process by which the organization translates its business objective and business strategy into market activity". Fifield, P (1992) Formal strategic planning in the hospitality SME's has evolved considerably in recent years there is still a tendency for the process to be the preserve of senior management. Implementation at intermediate levels of the organisation is often restricted, with middle managers unsure about the longer term objectives of the organisation or the means of achieving them. This approach will need to change as hospitality organisations become more proactive at the unit and departmental level in order to maintain their market position in the face of greater competitive and economic pressure. Based on the importance of trends identification and analysis for strategic planning and decision making, and on the processes of strategy development, this essay explores and assesses the relevance and structure of a formal strategic planning process to be adopted by hospitality SME's, the barriers to this process and possible actions to overcome them. Formal strategic planning process The formalisation of strategies is not a generalised procedure amongst organisations (Mintzberg, 1992, 1994). In reality, as Mintzberg has identified strategies can be formally developed (intended strategies), or "incrementally developed in the course of action" (realized strategies). Based on the importance of trends identification and analysis for strategic planning and decision making, and on the processes of strategy development, this essay explores and assesses the relevance and structure of a ...read more.

Middle

Another barrier mentioned was the high level of part-time employee turnover. One challenge mentioned by an owner is that with most of their staff there always comes a point where they cannot be further developed simply because of the size of the operation and in many of those cases it was necessary for them to leave, there's no way of promoting them...unless to make the business bigger there's nothing to do with them to enable them to take on more responsibility. A feature of small business operation is the hands-on involvement of the owner. Lack of competitive benchmarking (internal and external market intelligence) This relative lack of sophistication may mean that prices are lower then they need to be across the sector as a whole and that some Hospitality SME's may actually be under pricing. There is obviously a real problem with this in that the national museums, some of whom have outdoor sites are now free and that is affecting people's perception of value quite considerably. For other attractions other than us it has actually decimated their attendance. Location Location, which is likely to affect the continuity and frequency of supply to a business, can provide particular barriers to the implementation of formal strategic planning. For some Hospitality SME's, their relative isolation gave them very little choice as to their suppliers and very little control over the frequency of supply. There seems to be the potential for SME's located in the same area to work together to form purchasing consortiums of some kind. ...read more.

Conclusion

The nature of strategy is further obscured by its specialist applications, for instance, strategic marketing, and strategic business planning, corporate strategy and so on. The context in which the term is used is not that important as long as clear guidelines for long term action are included. In fact, according to (Olsen et al.), hospitality SME's are aware of the need to relate formal strategic planning to long-range, but so far the majority are just relating this information to short term decisions. Much of the planning activity of managers is informal in nature, managers are too concerned with the short term, and for this reason, their main goal is to get information about the economy, financing and customer needs and wants, and ignoring other sectors of the general environment. Olsen et al, (1994). There are many structural and psychological reasons why this happens. Some of the reasons supporting an informal strategic planning are expensive when engaged in at the highest levels of the firm. Another major reason is that any attempt to monitor both the general and task strategic comprehensively is beyond the resources and abilities of all SME's. There are many Hospitality SME's where strategies are not made explicit or simply do not exist formally. Strategies can not be purely deliberate and a few can be purely emergent. How ever, considering that Hospitality SME's will not formalise their strategies just to justify the creation of a planning activity, the justification will have to originate from managers who must realise the importance of planning the strategic of an organisation for better decision making, no matter what kind. ...read more.

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