Importance of preference in the Strategy Formulation

In recent years, international hospitality industry, like any other industry, has been influenced by the effects of globalization, the info technology revolution, and the buyer demand. Hence, the focuses on in tourism have experienced considerable alterations and obligated hospitality managers to re- verify their decision-making programs. Hospitality is difficult to control and assess so long as it handles a new awareness and addresses to new requirements. Its level can get through the client feedback. For tourism to be considered a business it must have a production process and a universal product mutually and inseparably related. The purpose of this section is to focus attention upon the theoretic aspects about the strategic selections in this field, just how they are simply elaborated, integrated, used, and apply. To become more precise, the chapter looks at the strategic alternatives used be Romania and Bulgaria on the ocean - side tourism.

2. 2. STRATEGIC CHOICE

2. 2. 1. IMPORTANCE OF CHOICE WITHIN THE STRATEGY FORMULATION PROCESS

Ranking the elements in a strategy formulation process, proper choice comes third. When there are no choices, there can be little value in considering strategy by any means. For being better understood, a explanation of strategy is necessary to mention. Regarding to Michael Baker, "Marketing strategy is a process that makes it possible for an organization to focus its resources on the perfect opportunities with the goals of increasing sales and attaining a ecological competitive benefit. "(See Baker, MICHAEL, The Strategic Marketing Plan Audit, 2008, ISBN, p. 3 ). According to the above meaning, any strategy must have a pre - founded plan which establishes goals, recognizes alternatives, and employs intuition and experience. Quite simply, it includes basic activities on an extended term, as well as goals. In general, small companies are tied to their resources, whereas large ones find it hard to change quickly. Even though managers seem free to make strategic choices, the results may be dependent in the same strategy on chance and opportunity, as on the managers' deliberate selections. It is proven fact that incidents, and especially surprising situations, can play a major part in deciding results. Any procedure for choice could be divided into four steps

Identifying options

Evaluating your options against choice criteria

Selecting the best option

Taking action

In practice, it may be difficult to recognize all possible actions at the same time. Sometimes, unexpected incidents create new opportunities, damage the foreseen ones, or change the total amount of benefits between opportunities. Therefore, good strategic options need to be challenging enough and attainable. And here comes examination, wisdom and skills, elements which will make the difference in determining strategies.

2. 2. 2 Composition OF STRATEGIC CHOICE

The Amount 1. 1 shows the way the three logical elements of strategy formulation process interact. The shaded record is a reminder of the value of context in deciding the aspects to be fixed by proper choice.

Figure 1. 2 expands the details so that to illustrate the importance of the overlaps. The common earth between any two circles is of some interest, but it is only where all three circles overlap that viable options can be found. Thus, the chosen strategy is a viable option since it is here where objective and assessment totally meet. Appealing are also the areas where any two circles overlap. So, the requirements for choice are based on intent and assessment.

In practice, the procedure for choosing a technique may be set up like in Figure 1. 3. It starts off by identifying available options. Any chosen strategy must answer the questions 'what ', 'how ', why ', 'who ', and 'when ' in order to provide answers to each one of these questions. There are likely to be different sorts of options. Figure 1. 3 shows three types: products/ services / market segments, resources/ functions, and methods of progress. They are really typical however, not necessarily exhaustive.

2. 2. 3 OPTIONS FOR Marketplaces AND PRODUCTS / SERVICES

The tourism industry is a constellation of businesses, agencies, and non-profit organizations which interact to create products. Thus, the sort of option relates to which products to offer in which marketplaces. The diagram in Physique 1. 4 set ups a certain decision, as it was recommended for the first time by Igor Ansoff. The axes of the diagram symbolize the merchandise, market needs, and market geography. The very last is defined by four cells. The possible alternatives about products and market segments can be represented as moves within or away from these cells. One group of choices is possible within the prevailing product / market place.

'Do nothing at all' choice means carrying on the present strategy. This plan compares any suggested change with the 'do nothing at all' option as a baseline. This program, however, is not often feasible for the permanent as opponents will be more likely to gradually take the market by bettering their product, functions, relationships.

'Withdraw' choice is going out of the marketplace by closing down or reselling out. This might seem a poor option but necessary to focus available resources into regions of greater power. It mainly occurs in declining markets.

'Consolidate' choice identifies attempting to keep market talk about in existing markets. That is a defensive option that involves slicing costs and prices. It usually occurs in mature markets or ones starting to decline.

'Market Penetration' choice means increasing market talk about within the same market. That is a more competitive option and entails investing in product improvement, advertising, or channel development.

Other possible options are Product Development that is developing and acquiring new products and Market Development, a choice which addresses to new market needs. Diversification is another type of option having to do with new products. It may be of two varieties: related and unrelated. Related diversification, in its convert, divides into: backward, forwards, and horizontal integration. Any management choice must give attention to the relative appeal of available options. Whether the present position is bad enough, even dangerous alternatives are better doing nothing.

2. 2. 4 OPTIONS IN METHODS OF IMPLEMENTATION

Options are likely to occur in methods of implementation as well. You will discover four main solutions to make companies grow their capacities: inside development, acquisition, contractual plans, and proper alliances.

Internal development is the most clear approach to growth. It involves developing the required skills among the existing personnel and acquiring the necessary production capacity. This technique has one downside: it takes time for the opponents to move faster, in any other case opportunities may be lost.

Acquisition is a very common implementation option, utilized by such countries as the UK and USA. Take - over's and mergers are dominant for this method of implementation. The drawback for mergers is that they can cause functional and internal disorder which distracts the folks. Competitors can use this turmoil in their gain because they are free to concentrate on customers rather than on interior changes. Many acquisitions may be beneficial at the right price, but may also demolish shareholder value at a too high price.

Contract arrangements, regardless of their type, have in common the necessity for a written contract which binds several parties into a definite agreement as to who will do what and pay what. When disputes happen they could be dealt with in courts by agreed arbitration procedures, or by not renewing today's agreement at the expiry. The deal arrangements come in various forms

Consortia are groups of companies that form a joint entity for a particular purpose. When this purpose is achieved, the consortium breaks up and the separate partners could find themselves competing in several consortia for a new project.

Franchising is common in retailing. The franchisee compensates the franchiser a fee for services and royalties. The franchisee is halfway between a worker and an unbiased entrepreneur. His risk is limited by the previous success of the brand name and the support and advice distributed by the franchiser.

Licensing allows a little inventive company to license its product to be produced and sold by others. This may determine quick growth by avoiding the need to build manufacturing or syndication capability.

Agents imply doing business in international countries or particular markets where in fact the level of business is too low to justify a permanent existence. The agent must know about local requirements and demands additional support from the principal when opportunities arise. There are conflicts among agents which include conflicts of interest.

Strategic alliances and partnerships attended into fashion over the last decade. Whenever there are contracts between your parties, there is a wider intention to cooperate at a proper level to be able to talk about information and to work together in a manner that goes beyond a clear contractual arrangement. It really is considered that for a quickly changing world, tactical alliances are the only way to accomplish velocity of response and global pass on.

2. 2. 5. GROUPING OPTIONS INTO STRATEGIC OPTIONS

Possible options about product / market segments, resources / functions, and the technique of implementation must be combined into a smaller number of proper options. This can be an up or down process. Underneath -up approach signifies linking what might be done at length into strategies. The top- down methodology means testing basic ideas of future route against precise options.

2. 2. 6. GENERAL Lab tests OF STRATEGIC OPTIONS

The exams, important otherwise, cannot be totally objective. Each tactical option has to pass two assessments as shown in Figures 1. 2 and 1. 3. These lab tests must be

Aligned for the reason that it conforms to the strategic intent. This test right answers the question: Does this program take us where we want to?'

Feasible in that the capacities and resources had a need to get success can be made available. The test answers the next question: 'Will it work? '

Acceptance is one third test, related to the two mentioned above, requesting the question: 'Will this option be appropriate? 'Acceptable methods to win the endorsement of two categories: those who'll have to approve it and those who will have to use it. Any strategic option has to pass all these three tests. In the event when more than one strategic option passes these tests, they need to be compared with each other for the best solution, at that particular moment. Additionally it is important to take into consideration such situations as dangers.

2. 2. 7. THEORETICAL FRAMEWORKS FOR ASSISTING STRATEGIC CHOICE

There have been several efforts to provide theoretical frameworks for making strategic selections. One highly influential, was the concept of Universal Strategies, devised in 1985 by Porter. He mentioned that the main choices interacting with any business will be the scope of the market segments. It is about how precisely to serve and how to be competitive in the chosen marketplaces. The opportunity can be wide-ranging- tackling the whole market -, or slim - tackling one particular area of the market. Companies achieve competitive advantage either by getting the least expensive product cost or insurance firms products which will vary in ways respected by customers. The axes of Physique 1. 5 will be the range of the chosen market and chosen basis of competition. The four quadrants in the same physique suggest four possible strategies. If the scope is thin, the distinction between cost and differentiation becomes unimportant so Porter mentions only three 'common strategies ': coast leadership, differentiation, target. While differentiation means a notable difference in the perception of the product by clients, focus implies a notable difference in marketplace. Matching to Porter, the weakest strategy is b 'being caught in the centre '.

Managers were thinking about common strategies when first publicized. Gradually, the truth showed a difference between differentiation and cost. Few companies manage to ignore cost however different their product may be. On the other hand, there are very few companies to confess that their product is the same as all others. Porter's Generic Strategy Model has been long in to the Strategy Clock (Figure 1. 6)

The important addition is the 'hybrid' strategy, an optional balance between price and the added value recognized by the customer. The offerings may often fall into three categories. A couple of 'cheap offerings' for those customers to whom the purchase price is the most crucial aspect. In the other end are the 'luxury offerings' with high quality and charm to the people customers who want the best and most differentiated. In the centre, will be the 'good - respected offerings' which bargain between the other two and offer a good trade - off between price and value.

2. 3 STRATEGIC Options UTILIZED BY ROMANIA AND BULGARIA

When discussing this problem, it is important to focus after the goals in tourism, goals that have modified in accordance with the new requirements. Among these goals, here are some
  • Increasing visitor satisfaction
  • Increasing the total amount visitor invest services
  • Delivering the best prices
  • Reducing seasonality
  • Involving the local authorities to generate community

In conditions of hotel industry, Romania has inherited a great traveler accommodation capacity from the communist period. Since the 1960s Romania had developed many accommodation facilities, mainly on the sea- aspect coast of the Black colored Sea. The low - positioned hotels from this area are convenient for a mass tourism demand. Following the 1990s the key tourism signals have described two distinctive times on the Romanian market. They are characterized by severe administration instability and insufficient procedures and strategies about the tourism industry. During 1990 - 2000 there was a slow intensity of the privatization process, only 55, 3 % of the accommodation facilities were private - owned. After 2001, Romanian travel and leisure industry has adopted and increasing style due to a accelerated privatization, 92 % of the accommodation facilities have been altered from point out - held to private - owned. Lots of opportunities have happened in modernizing the accommodation buildings and increasing the volume of the green - field assets. Elaborating and making use of strategies in Romanian tourism companies is a sophisticated process, alive, and in continuing expansion.

Meanwhile, Bulgaria has come in with a active and severe competition. It has determined the necessity to change this industry by elaborating new strategies which give attention to perspective, positioning, plan, and style.

The differentiation strategy, advised by Porter, is the strategy that the Romanian hotels are pursuing. The Romanian hotel market considers that differentiation can be the result of a strong marketing campaign meant to fortify the unique characteristics of the product / services within the mentality of the clients.

The hotels in Romanian market are seeking a target differentiation strategy. They may be producing products and services for the high price market segments. Another strategy utilized by Romania is working out strategy. Inside the service sector, it is of great importance to exist an interaction client - staff. The customers' satisfaction is given by the habit of the employees.

The hybrid strategy is pursued by those hotels which envision a decrease f the syndication costs and the ones that renounce to the unprofitable clients. These hotels attempt to preserve their strategy through the Internet and E- business.

The tourism industry in Bulgaria plays an important part in the country's current economic climate. Accession to the UE has had a great impact on its market, as the seaside summer season resorts on the African american Sea Coast are the main attraction. Among the strategies utilized by Bulgarian hoteliers is to bottom part their prices on the product's perceived value. Value - centered rates means that the marketing consultancy cannot design a product and a marketing program and then fix the price. Price is a worth value to consider. The business uses the non- prices factors to develop in the buyers 'imagination a recognized value by setting up prices to complement the recognized value. ( Kotler, 2003 ). To simplify, hoteliers are aware that consumers must feel as if they get a good deal for his or her money. Perceived value is the main element of worthwhile prices strategy.

Bulgarians also use the differentiating strategy. Their goal is to provide unique products and services so as to get yourself a price premium. Quite simply, by putting into action differentiated services or personalized services, a corporation can build its customer loyalty when substitute products are not available in the market. In this manner, they charge their customers a higher price than their competitors based on the expense of the delivery system and service quality.

The seacoast- leadership strategy has made the Bulgarian hospitality a name. Analysts in the areas of marketing and proper management have advised numerous approaches to help companies achieve cost - leadership. Some of these are employing mass - production techniques, obtaining economies of range, adopting a new technology, attaining mass -syndication, reducing suggestions costs, achieving learning resource, and improving usage of recycleables.

2. 4 SUMMARY

Strategic choice is the third logical component of the strategy process, playing a central role. The process of preference is deciding between different alternatives. There will tend to be possible options about a product and services and about market sections defined by both customer' need and geography. Signals between what is possible and what's required may follow from the results of a strategic assessment. The various options may inter-relate so that it is necessary to identify a small number of strategic options composed of correctly related options. Strategic options have to be aligned, satisfactory, and feasible. If here is more than one proper option, that meets these tests, they need to be compared both logically and politically in order to have a final decision.

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