Presentation Title Here HAT203 Hospitality and Tourism Management SWOT analysis for tourism, hospitality and event organisations: the macro context. Workshop 7 Copyright Notice COPYRIGHT COMMONWEALTH...

Presentation Title Here HAT203 Hospitality and Tourism Management SWOT analysis for tourism, hospitality and event organisations: the macro context. Workshop 7 Copyright Notice COPYRIGHT COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969 WARNING This material has been reproduced and communicated to you by or on behalf of Kaplan Higher Education pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice Learning Objectives 1. Recognise the way in which SWOT has been applied in various THE contexts; 2. Understand the coherent and logical sequence that exists between the SWOT presentation and detailed internal and external analyses; 3. Understand the relationship between the SWOT analysis and strategic formulation. 4. Explain what is meant by the macro-environment; 5. Describe the components of each of the five STEEP influences and be able to apply them to relevant THE contexts; 6. Explain how the STEEP factors are interlinked and interrelated in THE contexts. This Topic’s Big Idea “SWOT analysis has been widely applied in THE settings. Thus having an understanding of the external environment is of critical importance to most managers” SWOT Analysis in THE ‘Free’ resources in THE • SWOT analysis is widely applied in THE in literature and in practice. • It is applied to destinations individual events as well as organisations. • in applying SWOT analysis: – Strengths and weaknesses, normally factors internal to the organisation, destination, etc., can be controlled by managers. – Opportunities and threats are normally factors external to the organisation and beyond managers’ control. • THE often relies heavily on natural or free resource or resources not easily replicated or moved elsewhere (resource immobility). – Though these resources are not controlled by managers, they are given key factors and are strengths (or possibly weaknesses). – As such they can be viewed as internal to the analysis rather than external because they are integral to success or failure. Internal vs External Management control • key difference between strengths and weaknesses and opportunities and threats relating to managerial control: – strengths and weaknesses: managers can exert some control, e.g. if an organisation has a strong balance sheet (a strength) or if the organisation is over-staffed (a weakness) they result from managers’ decisions and can be addressed through further decisions; – opportunities and threats – managers may sometimes have some influence, but they cannot exert control, e.g. changing government policies, actions by competitors, or a war might produce opportunities or threats but cannot be controlled by managers. What the SWOT should and shouldn’t be • to summarise what the SWOT is and is not: – should be a position statement of ‘where we are now’; – should follow from robust internal and external analysis; – should (normally) base strengths and weaknesses on internal analysis, and base opportunities and threats on external analysis; – should present strengths and opportunities as factors which help to achieve objectives; – should present weaknesses and threats as factors which may prevent achievement of objectives; – should not present the SWOT as the strategy itself; – should not make statements about what to do in the future; – should provide a firm platform for planning for the future, i.e. formulating the strategy – the next stage in the process. SWOT Analysis Strengths Weaknesses Opportunities Threats Internal factors under the control of managers or underlying resources External factors outside the control of managers Factors which help the organization achieve its objectives Factors which prevent the organization from achieving its objecvives Assessment 2 Prep Before we begin, let’s review the assessment 2 guide and its requirements and then start our preparation. Form groups of three to four members (no more). Once you have created a group, discuss which case study you would like to analyse. Your workshop facilitator will provide you with copies. SWOT Implementation Often presented as a table • SWOT – often presented as a table (as on previous slide); • its underlying logic and the task of managers regarding each element can be summarised as: – strengths – build or protect so that they continue to be strengths; – weaknesses – address so that they become strengths in the future, or they are eliminated; – opportunities – position the organisation so that it can selectively take advantage of the opportunities available; – threats – position the organisation so that the threats are understood, and the organisation is protected from their impacts. Strategic Focus Needs to be clear and persuasive • SWOT should have a strategic focus that concentrates on those factors which have: – a major impact on past performance; – a major impact on future performance; – distinguish the organisation from its competitors; • two common mistakes (Lynch): – assuming the analysis is bound to be correct because it contains every conceivable issue and is truly comprehensive, when it actually shows a lack of strategic judgement; – providing a long list of points but little logical argument and evidence. A short list with each point well-argued is more likely to be convincing. SWOT Implementation Guidelines • In presenting SWOT a number of guidelines can be followed. – avoid detail; – must have strategic focus; – points often relative rather than absolute; – hard facts and softer factors both important; – Points should be prioritised and combined. – clear presentation. SWOT Implementation (Cont.) ‘Hunting elephants’ • John Argenti, one of the early writers on strategy, famously compared the points in a SWOT to elephants. • You’re looking for strategic elephants. – They are a rare species. – They are large but sometimes difficult to spot. – They can be difficult to turn around. – Do not develop more than six strategic elephants (for each category of the SWOT). SWOT Analysis Small business focus • Small businesses in THE have significant hurdles to overcome in successfully competing with larger businesses. • SWOT must represent a realistic appraisal which honestly represents the true position relative to larger organisations. – Small businesses are often associated with positive attributes such as friendliness, flexibility, originality and individuality. – There are also a number of factors which may inhibit small business performance such as the role of the owner and a lack of market power. – A SWOT for smaller THE organisations will probably be far more focused on individual characteristics of the owner/manager. – But as with all SWOT should be based on robust analysis of all the relevant factors. What Is the Macro-environment? No control for THE managers • refers to the broad environment outside an organisation’s industry and markets; – generally beyond the control and influence of individual organisations; – but can have significant impact on the micro-environment (industry and market) in which the organisation operates; – sometimes referred to as the far, broad or remote environment; • changes in the macro-environment can be very important to an organisation in that they can, for example: – bring about the birth or death of an entire industry; – make markets expand or contract; – determine the level of competitiveness within an industry. What Is the Macro-environment? What to leave out? In many ways analysis of the macro-environment is more difficult than micro (internal) analysis. – since it involves everything occurring outside the organisation; • the problems of dealing with so much information are: – assessing what should be included; – assessing what should be left out; – determining how the information should be organised in a rational and meaningful way; • There are no simple rules governing analysis. – Each analysis needs to be guided by what is relevant for that particular organisation. Macro-environmental Analysis How to conduct the analysis • macro-environmental analysis (Ginter and Duncan, 1990) involves: – scanning macro-environments for warning signs and possible environmental changes; – monitoring environments for specific trends and patterns; – forecasting future directions of environmental changes; – assessing current and future trends in terms of the effects such changes would have on the organisation. Macro-environmental Analysis (Cont.) Limitations – but still useful • The macro-environment can be extremely complex and there may be conflicting and contradictory changes taking place. • The pace of change in many situations is increasing and becoming more turbulent and unpredictable. • accordingly THE managers concerned with strategic analysis must: – Be aware of the limitations and possible inaccuracies; – carry out the analysis or update it continuously; – constantly seek to improve sources of information and analysis techniques; – use the information as one source of organisational learning – use the information to inform future strategy • Nevertheless – it is a valuable mechanism for increasing strategic awareness of managers. STEEP Analysis STEEP Analysis (Cont.) How to carry it out • It is necessary to analyse the effects of the factors on the organisation, its markets and its industry. – internal organisation – effects on the organisation’s core competencies, strategies, resources, value system and functional areas; – the organisation’s markets – effects on product markets (e.g. market size, structure, segments, customer needs and wants) and resource markets in which organisation acquires resources; – the industry in which the organisation competes – effects on the five competitive forces (buyer power, supplier power, threat of entry, threat of substitutes, competitive rivalry). Socio-demographic Influences • understanding the potential impacts of society and social changes on a business, its industry and markets; • will normally require consideration of the impact of: – social culture (values, attitudes and beliefs) – for products and services, attitudes to work, savings and investment, ecology, ethics, etc.; – demography – size and structure of the population on the workforce and patterns of demand; – social structure – attitudes to work, products and services THE example A number of demographic factors point to increased demand for air travel. These include: an increasing proportion of the population being healthy and prosperous; increasing numbers of retired people; and greater international mobility of labour. Workshop Activity Brainstorming Session Explain why an understanding of socio-demographic influences might be important for airline, hotel, and event managers. What sort of demographic factors might lead to greater air travel, hotel stays, and event participation in the future? Share your thoughts with the rest of the class. Technological Influences • understanding these involves developing understanding of the effects of changes in technology