Value Chains in the Tourism and Hospitality Sectors - Essay Example

Strategic Management (Value Chains) Customer’s Name Customer’s Grade Course Customer tutor’s Name 17th April, 2011 Abstract When any organisation is established, usually its main aim is to grow and become successful in all its ventures. Therefore the effort each organisation puts in a day to day basis is aimed at improving or maintaining its status. Therefore organizational development as well as operational improvements is carried out in industrial enterprises. In most cases, systematic and continuous processes are employed. Businesses are compared to other businesses that are leading all over the world. Chain management has been used to manage as well as improve the status of businesses. A supply chain ensures that the goods and services produced or otherwise offered by a certain industry ensure that the company or organization gets back what is required. They enable this to take place by show casing what they offer to their potential customers. Value chain management is a very global principle of management. It was first described by Michael Porter (p.36). It is the wholesome activities which are running in an organization to enable the organization to come up with its end product(s). My study will therefore discuss the different strategies that have been employed by companies in making their services and goods meaningful and thereby succeeding in their enterprises. The value chain will hereby be analysed and evaluated with regard to the tourism and hospitality disciplines and industries. This particular study will then give recommendations on how to make and construct an appropriate value chain. Basically, the study will be based on the contributions of the value chain in the success of industries at large and later narrow down to the hospitality and tourism industries. The study will involve an analytical approach and separate concepts of the value chain as expressed by various evidenced enterprises. Introduction A value chain is the wholesome activities which are running in an organization to enable the organization to come up with its end product(s). This means that products pass through all the activities of the chain in the desired order. At each level, a product therefore gains a certain value. The chain of activities gives the products a more added value than the previous status. Therefore, it is paramount that value chain must not be associated with the cost of initiating activities of the same chain. The concept of value chain is well understood when one looks critically at an organization from its smaller units which work out synergistically to produce the final product having utilised a given final cost. Simply speaking, rough diamond is less expensive than cut diamond. Therefore the documentation of processes, assessment as well as auditing and adherence to the product requirements are actually the core qualities of a business. The whole concept of value chain comes into effect as soon as a product hits the market. Then it goes through different procedures of verification as well as the actual use. The feedback by the users then completes this cycle conveniently. Statement of the problem Having extensively discussed the value chain, it is then easy to relate the value chain the actual industrial experiences so as to make this study objective. The value chain is therefore a universal practice that every industry as well as organization is ought to experience so as to strategize on the various ways one can be successful. The tourism and hospitality industries are said to be among the global institution that are rapidly growing to greater heights (Pender and Sharpley p.57). Therefore the success of these industries may be said to be through the value chain. They have undergone drastic measures so as to reach where we see them today. My study will therefore determine salient features of a value chain in the tourism and hospitality sectors so as to identify the opportunities as well as constraints that may keep these sectors from achieving their economic and social success. Each value chain group of activities will be assessed to find out if there is a resultant growth and success in the sector in line to its organization/sector goals. Discussion The value chain is usually made up of the basic value creating activities of an organization. The activities are said to be primary if they directly affect the enterprise. These key activities include in-bound logistical processes, operations, out-bound logistical operations, sales and marketing operations and lastly support services. The supports activities are said to be secondary and include the structure of administration, human resource management, technology as well as procurement. The cost of each value fragment is recognized (Porter, p.94). Correspondingly, the various processes which enable the production of services and goods to happen are the physical representation of an organization. Production starts by having the raw materials and finally by generating the intended output to the points of delivery rather than using supply chain to do so. By utilizing the analysis tools for strategic management it is easier to determine whether value chain has been successful. It can apply to supply chains as well as the distribution networks. The end products that are delivered to the consumer or customer contribute to a great deal of factors that relate to the economic success of a business. All these factors help in taking care of value chains, sometimes global in context. Porter (p.221), terms these larger interconnected system of value chains as the value system. A value system therefore involves the value chains of a particular firm and its distribution channels as well as the buyers of the end products. The value which is created along this chain is captures as the new approach by various organizational strategists. For instance, a tourism firm may decide to make all tour guides to stay near the tourist attraction centre to minimize the cost of travelling of the tour guides when on demand. When the downstream as well as the upstream of the value chain is exploited, the firm might overtake the intermediaries which leads to creation of new models in a business or in other words creating improvements in the whole value system (Ashley and Mitchell, p.1). Alongside the value chain as explained earlier, management also employs other strategies towards the success of any business or investment. Strategic management can be said to combine three processes which are strategy formulation, execution and assessment. These are processes that systematically outline the specific activities that are useful in management and are continuous in nature. These processes actually outline the value chain. Strategy formulation involves performing an analysis of a situation, evaluating possible sources of competition that are internal and external, micro-environmental as well as macro-environmental. The value chain takes the same trend during its execution. This step involves formulation of objectives that are parallel to a specific and reasonable timeline. Vision statement is also very crucial at this stage because they give a long-term view of possible success. They also come hand in hand with mission statements that outline their role in the society. Objectives also fall here. All the objectives are expected to be financial as well as strategic. These objectives should outline a strategic plan that would provide useful details of how they cam be achieved with ease. Once objectives, vision and mission have been formulated, they then go through the next step that involves implementation. Implementation involves the real action towards the set objectives and goals. It therefore requires a competent workforce that is committed and is very creative in coming up with ideologies that are relevant to the objectives. After implementation, the next step involves evaluation. This is an analysis that is geared towards finding out whether the objectives and goals have been achieved and also if the specific outlines have been followed to bring about the real motivation that was intended. The ultimate goal of strategy management here is to bring about success. In relation to the tourism and hospitality disciplines, strategic management comes along with strategy formulation. This is the process that will give the role of the whole business and outline possible success strategies. Through this, a value chain can then be relevant (Harvard business review, p.187). A value chain may only come along if a company has been established and stabilized. Being a radically growing sector, tourism needs to have specific objectives that are geared towards success and also missions that state the ultimate role of the organization in the society as a whole (Pender and Sharpley p.66). The approach of the value chain in the tourism and hospitality sectors covers all the stakeholders that are involved in delivering the services as well as the experience. These therefore act as the basis of launching a strategic priority along the value chain that will eventually target solution interventions to achieve maximum impacts in the sectors (Harvard business review, p.44). Thus the scope of this analysis includes the association of issues with specific bureaucratic constraints affecting the ease entry of small businesses, taxes and duties that are said to increase costs of hotels, the use of land and the general expansion of the hotel industry (Enz p.78). Therefore the value chain goes a long way in the analytic view of the tourism and hospitality sector. Concerning the value chain assessment, this study is specific in identifying the specific constraints, challenges and opportunities for action. It therefore provides action plans fro eliminating the roadblocks for effective tourism development strategy that can contribute to positive growth and competitiveness. In the course of the value chain assessment, one has to identify how value is appropriated among the various service providers and suppliers within this industry. In assessing the performance of operators within each segment, a number of alternatives are compiled and consolidated on the factors affecting the success and competitiveness of a tourism sector in a give country. By so doing, priorities will be set that will target specifically the intervention of industries and their locations as well as the broad country-wide policies. Analysis then focuses on itineraries that are specifically chosen to reflect on the heterogeneity of tourism products, destinations and segments of their markets. The travel package is a unit of analysis on its own because it facilitates the identification of the destination of a tourist based on the specific features and interactions in the economic dimension in supplying and marketing the package. Although the analysis may not reflect on the nature of the broader environment of the business, it brings on a basis of discussion concerning the climatic characteristics of the business climate. Travel operations have also been among the areas need evaluation. Most developing countries use second hand cars that have very high maintenance and operating charges. This is because individuals have to save up and start their own businesses. This way they cannot import cars because of the high importation duty. This makes the whole transport network for tourists a very hectic experience that cannot be revisited again. The success of this sector therefore involves serious intervention in terms of service delivery which is the ultimate cause of its fall as well ass its success. The value chain has successfully identified these problems that need to be addressed and therefore measures have to be put in place so as to avoid tourists not visiting the country anymore to see the attractive sceneries because of the conditions. This is based on a study of a destination and that the value chain has been applied to the whole tourist experience. The sudden ending interest of local counterparts of tourism has constituted the problems of this industry. These are the service providers such ass hotel operators and restaurant operations. Tourists expect comfort. It is through a value chain that one ca be able to see the actual problem as well as the intervention strategies. But all the same, management of the tourist expectations has become a very serious task that has posed so many challenges. The tourism industry is said to coordinate with other stake holders in the overall success of the industry. Conclusion It can then be concluded that a value chain in the tourism and hospitality sectors has been very significant in the past and present in outlining possible problems that are faced by tourism industries across the globe. The same chain has brought about the attention to these problems which is an issue that has added a positive impact in the ultimate success and effectiveness of the services delivered by the workforces involved in this industry. The value chain therefore has been extended beyond individual claims. It can apply to supply chains as well as the distribution networks. The end products that are delivered to the consumer or customer contribute to a great deal of factors that relate to the economic success of a business. All these factors manage their own value chains, sometimes global in context. The value chain is therefore a universal practice that every industry as well as organization is ought to experience so as to strategize on the various ways one can be successful. The tourism and hospitality industries are said to be among the global institution that are rapidly growing to greater heights. They can do this through constant evaluation through value chains. These value chains bring out the skeleton of service delivery. The value chain then provides action plans fro eliminating the roadblocks for effective tourism development strategy that can contribute to positive growth and competitiveness. References Enz, Cathy. Hospitality strategic management: concepts and cases. Hoboken, NJ: J. Wiley & Sons, 2009. Harvard business review. Harvard business review on managing the value chain. Boston, Mass.: Harvard Business School Press, 2000. Hoboken, N.J. cited in Enz, C. (2009) Hospitality strategic management: concepts and cases, Wiley and Sons… (LOCATION) Mitchell, J. & Ashley, C (2007). Pathways to Prosperity: How can tourism reduce poverty? A review of the pathways, evidence and methods. Study for the World Bank, 2007. Pender, Lesley and Sharpley, Richard. The management of tourism. Thousand Oaks, California: Sage, 2005. Porter, Michael. Competitive advantage: creating and sustaining superior performance: with a new introduction. Simon and Schuster, 1998. Slob, B & Wilde. Tourism and sustainability in Brazil – the tourism value chain in Porto de Galinhas. Rio Dejenero: Macmillan, 2006. Read More