TOUR 161 REVIEWER 10 SCHOOL OF THOUGTHS ON STRATEGIC

MANAGEMENT
STRATEGIC MANAGEMENT
- is a field of study that involves the process
Henry Mintzberg - a globally acclaimed academician
through which firms define their missions,
and author on business and management is the
visions, goals, and objectives.
proponent of the 10 SCHOOL OF THOUGHTS ON
- It provides a holistic view of an organization.
STRATEGIC MANAGEMENT
Strategy comes from the Greek word STRATEGOS means - The model describes each school in strategic
“GENERAL” or in literal terms "LEADER OF THE ARMY". perspective and provides a critical viewpoint, thus,
it acts as a very good overview of the entire field of
IMPORTANCE OF STRATEGIC MANAGEMENT Strategic Management.
- Provides a long-term perspective
- Encourage innovation 1. The Design School - The company does an internal
- Formulate Better Strategies analysis with the help of SWOT analysis.
- Creates A Competitive Edge - The company then tries to match its internal
- Enhanced awareness to threats strength with the market strength which is
required.
HISTORY AND ORIGIN OF STRATEGIC MANAGEMENT - This proposes a model of strategy- making that
400BC seeks to attain a fit between internal
Sun Tzu - The basis of strategic management can be linked capabilities and external possibilities.
to the works of Sun Tzu. 2. The Planning School - Firms use the same
- Reference to space, quantities, and other strategic framework which is a structured method
factors related is like the characteristics of the used to define how a project or initiative supports
positioning school. the key objectives of stakeholders
- According to Sun Tzu, calculations underlie - The complete process and the plan which the
victorious situations in wars. company will implement is documented from
18 Century
th
the start to finish.
Carl Von Clause Witz - considered strategy 3. The Positioning School - The management has to
“a variation of themes” in war situations. determine the competition already present in the
- According to him, the strategy was “open- market, and where is their own company
ended and creative” in a situation of chaos and positioned.
disorganization. - Once the market has been analyzed, the right
strategy is needed to improve the positioning of
1950’s – 1960’s the product.
Leaders - Firms used the top-down approach, with the top 4. The Entrepreneurial School - This school of
management at the core of the decision-making process. thought puts all the focus on the CEO or the leaders
- The focus was on leadership, interpersonal of the company.
relationships, and the systems, processes, and - Strategy exists in the mind of the leader as a
structures in an organization. perspective, specifically a sense of long-term
- The strategic management process was not direction, and a vision of the organization' s
formalized and explicit future.
5. The Cognitive School - This thought process
1970s – 1980s studies people’s perception and information.
Tourism and Hospitality - Firms adopted the strategic - It is a mental and psychological process to find
planning approach with an. out what is in the minds of the consumer and
- Emphasis on analysis and formalized planning how do we improve on that or use that
- Special teams assigned to develop plans information.
- Hospitality and tourism domains on strategic 6. The learning School - The company looks at things
planning that worked and tries to implement the same thing
over time with the assumption that it will work again.
1990s - The company also looks at things that did not
Competitive Advantage – Globalization led to emergence, work in its favor (or in favor of a competitor who
and strategic alliances became the focal point around tried the same thing) and discards such things
which researchers developed the literature. /processes.
- Conceptualization of characteristics 7. The Power School - Anyone who is known to have
power over the company, can drive the company
2000’s – Present forward.
Strategy Implementation - focus on environmental - This ensures that there is lesser resistance for
scanning in the hospitality industry context have made the strategy to be implemented.
attempts to develop the strategy implementation 8. The Environmental School - Major emphasis is on
framework for hospitality and tourism firms during this the environment
period. - which can be a raw material or a major factor in
the strategy of the company.
- Situational analysis is the most used tool in the
environmental school.
 - The strategy is a response to the challenges a. Tour operators, travel agents, and tourism organizations
imposed by the external environment. b. Travel and transport operators
9. The Cultural School - The cultural school tries to c. Leisure, recreation, and entertainment venue
involve many different departments within a d. Restaurants, bars, clubs, and cafes
company. It is most useful during mergers and e. Hotels, resorts, motels, camping grounds, bed &
acquisitions. breakfast (B&B) establishments, and hostels
- It emphasizes the role of social values, beliefs
and culture in decision making. Organizations that operate in the H&T industry can be
10. The Configuration School - As per the grouped under different categories depending on their
configuration school, strategy needs to consider a primary activities, size, profit motives, and geographical
lot of things which can go wrong and cannot be coverage.
derived from simple set of values.
- An organization forms various sets of values In terms of their primary services, organizations can be
which must be transformed so that the categorized as follows:
organization reaches the point that it desires. 1. Travel and Transport
2. Accommodation (Lodging)
AIMS OF STRATEGICMANAGEMENT 3. Food and Beverages
1. The Corporate Level - Strategy is about asking 4. Entertainment and Recreation
questions about what business the firm is in or 5. Tourism Offices or Destination Management
would like to be in, the firm’s potential to create Organizations
value by being in the business or expanding into a 6. Non-governmental Tourism Organizations
new line of business, and the resources and
capabilities the firm already has or needs to get to CATEGORY: SIZE
sustain/create competitive advantage in its SMEs - A further grouping of the H&T organizations can be
business or businesses. made based on their size such as small, medium, and large.
2. The Business Level - Companies deliberate and - Independent and flexible small and medium-
purposeful actions to achieve competitive sized enterprises (SMEs) dominate the tourism
advantage within their specific market segments, market worldwide.
how can we create competitive advantage in our
product market domains in each strategic CATEGORY: PROFIT MOTIVES
business unit. A high majority of H&T organizations aim to make a profit
3. The Functional Level - The firm’s objective is to and achieve some financial objectives to satisfy their
sustain its advantage by focusing on efficiencies It owners and shareholders.
also engages in constant innovation to ensure new Nonprofit Tourism Organizations - Their primary
product/service development while maintaining its aim is often not to make profit but to achieve other
quality, as well as the customer satisfaction nonfinancial objectives.
related to them, are at the highest level
CATEGORY: GEOGRAPHICAL COVERAGE
CHAPTER 2 H&T organizations can be further grouped into local,
DEFINING THE HOSPITALITY AND TOURISM CONTEXT regional and global firms.
Services - are becoming increasingly important - Local – operates in only 1 city or country
part of the global economy. - Regional – operates only geographical region,
- It is estimated that on average 70 percent of the covering multiple cities or states
gross domestic product (GDP) of the - Global – operates in many countries and almost
Organization for Economic Co-Operation and all continents worldwide.
Development (OECD) (2007) countries come
from service industries. CHARACTERISTICS OF HOSPITALITY AND TOURISM
H&T industry - often named as the number one industry ORGANIZATIONS
worldwide in terms of generation of income 1. Inseparability - customers need to be present and
and employment. participate in the service delivery process.
- This means that the separation of the
According to Nykiel (2005) definitions of the H&T industry production and marketing functions, which are
are often limited by the unique viewpoints of sectors within important characteristics of the traditional
the industry. manufacturing industry, is not possible in the
- To overcome this confusion, Nykiel (2005) service delivery process that is found in H&T
placed all these viewpoints under a wider organizations.
perspective called "hospitality" and further 2. Simultaneity - Services in H&T organizations are
stated that the hospitality industry created and consumed simultaneously, which can
encompasses travel, accommodations, food prevent employing active quality control mechanisms.
service, clubs, gaming, attractions, 3. Perishability - As production and consumption in H&T
entertainment, and recreation. organizations are simultaneous, services become
Kandampully (2007) - notes that hospitality organizations perishable if they are not sold.
operate within a network of service organizations. - Subsequently, their value is lost forever.
They are largely interrelated and interdependent, and
include the following:
4. Tangibility - Hospitality and tourism organizations offer SWOT Analysis - the procedure of recognizing strengths,
a combination of tangible and intangible products weaknesses, opportunities, and threats.
(Kandampully, 2007). - Lays out a situation analysis of the firm
- intangible aspects of services offered by H&T regarding its current position in each market.
- organizations are critical to customer Strategic Fit - the alignment between the firm's internal
satisfaction. resources and capabilities and external opportunities
5. Heterogeneity - Services provided by H&T - "fit" ensures that firms can
organizations may also vary considerably. align themselves with emerging opportunities
- It is often difficult to standardize every Strategic Intent - firm's posture toward its environment in
employee– customer interaction in the H&T terms of identifying the opportunities and threats and
business. positioning it to address them by acquiring resources and
6. Cost Structure - Companies need to maintain a steady capabilities ahead of time.
flow of customers to maintain the profitability of their Competitive Advantage - the advantage that firms can
businesses. create in the marketplace by being ahead of competition
7. Labor- Intensive - This is because personal during the time horizon over which existing resources and
interactions and experiences are important parts of capabilities are used to the fullest extent.
services, and employees play a key role in this process.
- Being served and treated nicely by employees is ENVIRONMENTAL CHARACTERISTICS
a major factor in getting repeat customers.
1. Environmental Uncertainty - Difficulty in
accurately predicting the occurrence of an event
According to Nykiel (2005) - Businesses in the H&T industry
2. Environmental Volatility - Rate of change related
operate in a dynamic and complex environment. According
to factors in the external environment
to Nykiel (2005), product design, market segmentation,
3. Environmental Munificence - The availability of
franchising, real estate investment trusts, and new product
slack resources and the opportunities for firms to
concepts are some of the strategic driving forces that cause
grow
the industry to be very dynamic.
ENVIRONMENT DIMENSIONS
NUMBER OF IMPORTANT AREAS IN WHICH STRATEGIC
MANAGEMENT CAN HELP H&T ORGANIZATIONS: 1. Simple Complex Dimension - the number of
➢ Providing a holistic view for the entire H&T organization factors or variables that influence the environment
➢ Providing a sharper focus on what is strategically important - The fewer the factors, the more stable the
➢ Providing a link between the external environment and the environment. The greater the number of factors,
internal environment
the more complex the environment.
➢ Analyzing a complex and rapidly changing external environment
➢ Analyzing an organization’s strategic resources 2. Static- Dynamic Dimension - the degree of
➢ Giving a clear sense of strategic vision and direction change over time related to the factors or variables
➢ Defining organizational purposes pertaining to the internal and external
➢ Developing measurable goals and objectives
environments
➢ Identifying key resources and investing in core competencies
➢ Formulating decisions and making them happen - The lesser the change, the more static the
➢ Managing change environment and vice versa.
➢ Coordinating organizational activities and allocating resources
➢ Understanding the complexities of decision making and the CHAPTER 4
structuring of an organization THE MACRO ENVIRONMENT
➢ Understanding the role and importance of the organizational
Macro Environment - can be described as the collection of
structure and culture on the strategy process
➢ Reducing and managing uncertainty inside the organization those factors and conditions, which has the capability of
➢ Measuring intended and unintended outcomes of the strategy influencing the business positively or negatively.
Process - It is the type of external business environment
in which the firm and its micro-environmental
CHAPTER 3
forces exist which gives opportunities or poses
THE HOSPITALITY AND TOURISM CONTEXT
threats to the firm.
Internal Environment - consists of firm's own resources
and capabilities PESTEL ANALYSIS - “PESTEL” is an acronym for the
- involves Strength and Weaknesses of the following factors: POLITICAL, ECONOMIC,
organization SOCIOCULTURAL, TECHNOLOGICAL, ENVIRONMENTAL,
COMPONENTS OF INTERNAL ENVIRONMENT: and LEGAL FACTORS.
1. Human Resource - allows you to take a closer look at your
2. Organizational Function company’s macro-environment.
3. Organization Level - This analysis results in a risk-reward catalogue
which is used as the basis for further analyses
External Environment - refers to the individuals, firms, for strategic marketing.
processes, and institutions that affect the firm
- They may bring opportunities and threats. FACTORS
1. Political Factors - Include all governmental
CHARACTERIZING THE EXTERNAL ENVIRONMENT aspects which directly or indirectly affect your
Strategic Analysis - Involves considering the major company's business activities.
influences affecting the organization's ability to fulfill its
mission in terms of resources and environment.
These factors include but are not limited to: In a PESTEL analysis, you will examine which of the
• the level of bureaucracy and corruption following factors, among others, impact your company:
• current and future foreign policy • competition laws,
• the stability of the political system • antitrust laws,
• freedom of press • environmental regulations,
• the country's economic system • consumer protection laws,
• security policy • occupational health and safety requirements,
• merger and acquisition laws,
2. Economic Factors - can provide insight into the • data protection,
economic development of the markets your • copyright and patent laws,
company is interested in. • liabilities,
These factors include but not limited to: • manufacturing standards
• economic growth • labeling regulations.
• gross domestic product
• population
• production conditions
• consumer behavior
• capital flow
• import/export
• stock market trends
• credit availability

3. Socio-Cultural Factors - is a term related to social

and cultural factors, which means common
traditions, habits, patterns and beliefs present in a
population group.
When describing the socio-cultural factors, you should
first consider demographics:
• age distribution
• social classes,
• life expectancy,
• population growth rate,
• language,
• wealth distribution,
• level of education and
• family size and structure.

4. Technological Factors - Technological

developments can also lead to both opportunities
and risks for your business model.
The technological factors you should consider in a
PESTEL analysis include:
• access to new technologies,
• the level of innovation,
• disruptive technologies,
• government expenditure on research and
development

5. Environmental Factors - The second “E” in the

acronym “PESTEL” stands for environmental.
The environmental factors include physical and
geographical features such as:
• climate,
• topography,
• country size,
• infrastructure and
• the availability of natural resources

6. Legal Factors - Your company’s scope of action in

a targeted market largely depends on the legal
system of the country in question as well as the
legal awareness of the general population.