Strategy for Tourism

1. Strategy for Tourism Part 1 Unit 1 Introduction and Overview

2. 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.

3. Module Outcomes Intended Learning Outcomes On successful completion of this module the students will be able to: understand the theory and practice of strategy in tourism develop appropriate strategies based on critical situational analysis provide an evaluation of the strategies pursued in different tourist contexts identify and evaluate the critical success factors

4. There are 12 units in this module Part 1 Strategic Purpose Introduction to strategy Mission and purpose Culture and strategy Part 2 Strategic Analysis The external environment: PEST The external environment: Competition The internal environment: Capability Part 3 Strategic Choice Strategic options Strategic direction and methods Strategic evaluation Part 4 Strategic Implementation Organising and resourcing Managing and monitoring Strategy in action

5. Reading

6. 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

7. Unit 1 Objectives After studying this unit and related materials you should be able to understand: the meaning of strategy the process of strategy the importance of strategy the contexts and uses of strategy in tourism competing approaches to strategy and critically evaluate, explain and apply the above concepts.

9. Case Study 1: The Tourism Strategy for New Zealand

10. 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 investment The tourism sector takes a leading role in protecting and enhancing the environment The tourism sector and communities work together for mutual benefit”

11. Strategic Planning: The Elements There are four key elements of corporate strategy: Strategic purpose Strategic analysis Strategic choice, and, Strategic implementation

12. Strategic Purpose This is often defined by an organisation’s mission which includes: what the organisation is trying to achieve what its purpose or aim is where it is trying to head for in the medium to long term. Mission is influenced by stakeholders culture nature of business

13. 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 Association The Ministry of Tourism Tourism New Zealand

14. Strategic Analysis This involves consideration of the major influences upon the organisation's success in terms of Resources (capability), and Operating 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.

15. 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

16. Strategic Choice This is concerned with generation of strategic options evaluation of strategic options, and, selection of strategy

17. 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

18. Strategic Implementation This is concerned with: resource planning organisational structure logistics and implementation timetable timetable for implementation monitoring and review

19. 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.”

20. 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)

21. 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)

22. 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".

23. Characteristics of strategic decisions They are: are complex rather than simple are integrated rather than isolated are long term rather than short term are proactive rather than reactive have an impact on the whole rather than a part of the organisation involve major rather than minor change involve grand design rather than marginal tinkering are made by those in positions of power in the organisation rather than subordinates

24. Scope of corporate strategy for tourism Tourism Profit-making organisations NGOs Government Organisations NTOs Destinations Master Plans Specific goals – e.g. climate change Mega projects and Events

25. The importance of strategy Avoid Strategic Drift Survive Turbulent Environments Avoid Organisational Fragmentation Provide Co-ordination

26. Avoid Strategic Drift

27. Survive Turbulent Environments

28. Avoid Organisational Fragmentation

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

30. Strategy as a prescription vs the contested approaches Strategy as prescription This 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 strategies Other 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.

31. 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.

32. Case Study: BAA 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?

33. Review Questions 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. Explain the relevance of the terms strategic drift, turbulent environments and organisational fragmentation to a named tourism entity. Map out the four key elements of strategy for a named tourism entity. 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? What factors can make strategy a contested concept?

34. Case Study: Ryanair

35. Review Questions 2 Read the following strategy statement for Ryanair (or find alternative) http://www.ryanair.com/site/about/invest/docs/Strategy.pdf and 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?

36. Ryanair • Below is a link to a presentation showing strategic data for Ryanair • http://www.ryanair.com/doc/investor/2009/Investor%20Day%202%20Oct%202009.pdf • This is the presentation about Ryanair given to investors in the company

37. Strategy for Tourism Unit 1 Introduction and Overview The End