Harvard style essay tourism leisure and hospitality revised
Name:<br />University:<br />Course:<br />Tutor:<br />Date:<br />Tourism, leisure & hospitality<br />Executive summary <br />The tourism, Leisure and Hospitality industry is define as a consumer industry in terms of the circumstances under which the goods and services are consumed. This is an overlap to the usual classification of the industries which is defined according to the goods or services they produce (Luck & Lancaster, 2003)<br />This research paper analyzes the tourism, Leisure and Hospitality industry basing on the economic analysis tools by Porter, Porter (1980) proposed that firms in any economic arrangement benefit from the understandings of the forces which drive competition and the profitability in their sector. Matthews (2000) proposes that in order to understand their position in market that is very competitive, a very competitive analysis using economic tools should be undertaken. The Porter’s model which is also referred to as the five forces competitive analysis proves to be the most effective economic analysis tool to be used in this case. Generally the tourism, Leisure and Hospitality industry has a unique business environment which affects all the competitors. According to Porter, five macro factors that influence the industry can be identified in relation to competition; (1) The bargaining power of the cunsumer (buyers). The bargaining powers of the consumer shows the strength in terms of the bargaining ability, particularly the price, which the buyers have over their suppliers. (2) The bargaining power of the suppliers. <br />The Suppliers in the consumer industries include the employees in various sectors who supply labor in form of their services, this factor influences the profitability of the sector, if the suppliers increase the prices (or the wages) it leads to the increase in the industrial costs which reduces the profit margins. Powerful suppliers control the supply of goods and services to the Tourism, Leisure and Hospitality industry. (3) The threat from the new entrants. The threat from the new entrants is directly related to the barriers to entry into the industry. This is based on the ability to generate the economies of scale and experience, the opportunities for the product differentiation. <br />The amount of capital which is required to buy into the industry, and access the distribution channels. In the tourism, Leisure and Hospitality, there are low barriers to the entry in most sectors. (4) The threat of the substitutes. The Substitute industries which provide the competing product with offers that perform the same function. The Continual advancement in the technology keeps on changing the potential threat from the substitute products. For instance, the rapid development of the video-conferencing is a substitute product for the hotel meetings.<br />Introduction<br /> The Tourism, Leisure and Hospitality industry is an essential industry. This industry involves a wider range of activities which includes the provision of the transportation, accommodation, recreation, food, and the related services. Travelling is for all the purposes, including recreational and business. Hospitality and tourism are certainly two of the most widely used words in the fields of hotels, restaurants, travel, and related areas. <br />Leisure is encompasses events which are hosted regularly for relaxation. Leisure is forms the essential factor which contributes to the demands for the tourism and recreation.( Kotler,& Keller, 2006). Leisure therefore contributes to consumer force in this industry since it influences the demand for the services. It is therefore the anticipation of leisure which is the operational demand factor, and the use of leisure is a factor of supply. Leisure time is the fundamental resource which is input and consumed in the tourism, Leisure and Hospitality industry. The leisure/entertainment events create employment opportunities for thousands of people in a diverse range of roles. Leisure is a multidimensional sector that provides a variety of services in the areas which include the corporate events such as the product launches, press conferences, corporate meetings and general conferences, road shows and the grand opening events for various functions such as the special corporate hospitality events including the concerts, award ceremonies, film premieres, launch/release parties, and the fashion shows. The industry also includes fields such as the exhibitions, conferences and the seminars as well as live music and the sporting events. This research paper analyzes and links the tourism, leisure and Hospitality industry through the analysis of the industry to establish its economic situation. <br />Methodology<br />This research employed a web based survey in gathering data on the industrial analysis. I analyzed several theories that act as the strategic tools for analysis. The instrument was divided into two parts;<br /><ul><li>The “Descriptive Analysis”, which describes the tourism, Leisure and Hospitality industrial analysis basing on Porters model of analysis.
The “Critical Analysis”, which assesses the extent to which various factors identified by Porter influence the Tourism, Leisure and Hospitality industry. </li></ul>The contexts for the study were based on the distinctive nature of the Tourism, Leisure and Hospitality industry. Information was collected in the process of evaluation of the influences of the fundamental factors that determine the profitability: Industry structure, that determines the profitability of the average competitor and sustainable competitive advantage that allows a firm to outperform the average competitor” (Porter, 1979).<br />Analysis of selected industry<br />This paper examines the five forces which impact competitiveness within and thus the profitability of a competitor in the Tourism, Leisure and the Hospitality industry. From the guidance provided in the Five Factor Model recommendations are made to enhance and refine this industry.<br />Porter’s Five Factor Model<br />The five forces that impact on the profitability and competition in the industrial market as outlined in the Porter’s 1980 work are: the barriers to entry into the sector by the upcoming industries, the threat of substitute products and services, the bargaining power of the buyers and sellers, and the rivalry among existing competitors in the industry. Considering these factors in accordance to the Tourism, Leisure and Hospitality industry, porter’s model provides the best means for analysis. According to Porter each of the above factors has a difference in relevance or impacts differently on the businesses so they are presented below in order of their impacts. Porter (1980) indicated that the most important determinant of a marketplace’s profit potential is the intrinsic power of the buyers and the sellers. <br />Threat of the Substitutes<br />The Tourism, Leisure and Hospitality industry provides higher chances to start new business and progress successfully. The firms have been classified into a range of standards, with variations in the levels of services and the amenities. The constant challenge to any business is always how to get the customers to choose its services over the competitor. This industry being a an information based consumer industry, the technological advancements in the internet makes the overall market to be more efficient while at the same time expanding the size of the potential markets and creating the new substitution threats. Given the potency of this industry a firm is required to design an efficient economic analysis tool.<br />The threat is that another firm chain may easily erode the customer base with a newly formulated the marketing campaign. According to Porter the development of a value chain process analysis, which is supported by collaborative event management, the structuring and sharing of the customer focused value chain, enhances the general performance of the value chains.<br />Bargaining Power of the Buyers<br />Business persons choosing a firm for business in the Tourism, Leisure and Hospitality industry are the suppliers who are at par with the changes in the ability of their consumers. It is possible for the consumers to survey on the best firms that offers great services. These can be done by the assistance from the travel agents, the corporate travel consultants or the middle men in the industry to determine where they will get the services. Porter’s model therefore predicts the ability of the buyers bargaining power and the business intermediaries. <br />The Tourists who are the major consumers in the Tourism, Leisure and Hospitality industry are more and more capable of making use of their bargaining power thereby creating the fulfillment of Porter’s model. Due to the increased bargaining power of the consumers, This economic force shifts the bargaining power to the end users as it had been predicted by Porter’s model, the buyer freedom reduces the cost of switching to another supplier therefore reducing the loyalty to a single firm as a result most firms maximizes in the use of its one time opportunity to ensure that the customer sticks to the firm by impressing other customers with a very unique and valuable differentiator. <br />The Rivalry among existing competitors<br />The rivalry amongst the competitors in the Tourism, Leisure and Hospitality industry is fierce. The potential customers identify a firm which is offering better services, amongst the competitors. Consumers in this industry tend to seek the best prices for the best experience and the tendency of the firms is to reduce the prices to a competitive level. This industry covers a wider area so the market is widened thereby increasing the number of the competitors. For example, someone who wants to spend the day in the historic site can easily choose a tourist firm in the nearby town if the amenities or the prices are low. The Variable and fixed costs can be different in the areas which are more expensive to live.<br />Barriers to Entry<br />The initial investments in the Tourism, Leisure and Hospitality industry creates quite a barrier to the entry by the new and upcoming firms. However certain barriers to entering the tourism market are reduced through the economic analysis. Economic analysis gives the new competitors the access to the potential suppliers and the resources. Even a starter in the industry can use the results from economic analysis as the key marketing concepts and the lures for the customers. <br />Differentiation is a vital barrier to the entrance. A firm that can successfully differential itself by the location, service, amenities or other quality has the greatest potential to attract and keep the clients. Another barrier to entry into business in the Tourism, Leisure and Hospitality industry is the expertise that a firm posses. In this industry the employees can leave one firm chain to work in another and they take that expertise in terms of the training given or the experience that they have acquired. It is through the areas of expertise and differentiation that a firm can make the greatly impact on its clients, Most of the established tourism, leisure and Hospitality companies have the synergies between their established business and business channels.<br />Bargaining power of the suppliers<br />In the Tourism, Leisure and Hospitality industry, the bargaining power of the suppliers has the impacts especially in the services. The employees to the firms are the major suppliers, the bargaining power of the labor supply is higher when there are fewer people to fill the service section of the industry, and the firms can attract excellent staff and create a chance for the provision of excellent and exceptional experiences to their clientele. To create a reserve of their suppliers, all the firm chains should have section for employee recruitment as part of their strategy. The supplies that are needed by firms such as the hotels are also easier to attain whether originated by the supplier or by the hotel chain. With their products in the greater demand by greater numbers of the firms the suppliers gain more measure of power since there is competition for their services and products.<br />Findings about the industry<br />Firms in the Tourism, Leisure and Hospitality industry benefits from Porters model of analysis because of its ability to produce greater value in terms of profitability, the industry is generally dominated by a few large firms. They have the greatest market shares and in most cases they influence the structure and shape this industry. The firm’s planning sector can benefit from analysis. The firm should aim at making the profit through the commercial means. The failure to make profit over long periods of time is likely to cease the trading. These include the parks, restaurants, tour operators and the travel agents. The Human resources can be managed by the analysis as part of the overall strategy as well as the provision for service personnel and who benefits from Porter’s ideas, Value can be increased through standardizing the firms across multiple locations, forming the business knowledge directories, and allowing for real time access to the resources by the consumers, every firm benefits by controlling and forecasting through its systems with the suppliers as explained by Porter. This model leads to greater profitability (Porter, 1980)<br />Each type of firm needs to identify its unique strengths, the target market and align its strategy to support its identity, the firms’ chains choose to be low cost, or to command the premium prices. Distinguishing a firm from its competitors becomes vital. This can easily be enhanced by porter’s model, through the superior inputs, better training of the staff as part of the supplier and through effective management. Differentiation adds value which makes it hard for the competitors in the same field to maintain the distinctive strategic positions of the firm because it eases change to best practices and it improves the operational effectiveness. These distinctions make the business more profitable. The firms in the Tourism, Leisure and Hospitality industry are fragmented. Therefore there is need for each firm to carry out an independent industrial analysis to make it easier for the consumers from far and wider areas to identify the firm or to order for the services, the consumers must easily access the services. It is more likely to increase the profitability when the process is easy to transact and complete. Porter points out similar examples within the industries, this has direct implications for the firms. Other than travel agencies who arrange the hotel stays, the tourism business is always a face to face business, this normally sustains the economic value of the transactions. For all firms the porter’s model complements but does not cannibalize the established ways of doing the businesses. Hence it becomes a link in the business strategies.<br />Conclusion<br />Whether a firm or its chain is well established or brand new, the underlying forces that determines its profitability will include: the threat of the substitutes, the bargaining power of the buyers, the intensity of the rivalry amongst the competitors, the barriers to entry for the new competitors, and the bargaining power of the suppliers which helps to determine the profitability. When combined, these factors determine the economic value and even the survival. The porter’s model of industrial analysis provides the opportunities for the firms to establish the unique or distinctive positions for their businesses. In the case of tourism firms this is a crucial economic analysis tool. <br />The Porter’s five factor model helps to understand the rise of new ideas and the business firms in the context of the bargaining power of the Buyers. It helps in the understanding of what factors drives the businesses to differentiate themselves. It also helps in explaining why the labor may have greater bargaining power in the firms under the tourism industry; Porter’s ideas on the Bargaining power of Suppliers helps to determine the strength of the industry.<br /> In reviewing the strategies of most firm chains, differentiation is the key component. Most firms choose to differentiate themselves by location and luxurious experience. Other firms differentiate themselves by means of standardization and price stabilization. The firms’ strategies must be aligned with their business strategy in order to produce the desired profitability; Porter’s model provides the way of outlining the issues and the dangers which are inherent in each force.<br /> In this paper, the recommendations for successful industrial analysis are made based on Porter’s model and the implementation of ideas in this model ensure greater or continued profitability at the time of planning and structuring of the firm. This includes not only the customer interactions but the applications in a variety of areas such as supply chain, the financial and Human Resources in order to increase the value chain. To successfully analyze a business, Porter makes it clear that the model adds value when it is used in conjunction with good business strategies.<br />Reference<br />Kotler, P, Keller, K.L, 2006.Marketing Management, 12th edition, Upper Saddle River, New Jersey, Print<br />Luck, D, Lancaster, M, 2003. Managerial Auditing Journal. Bradford: 18-3, p213 <br />Matthews, V. E. 2000.International Journal of Contemporary Hospitality Management. 12-2, 114-118,<br />Porter, M.E. 1979.How Competitive Forces Shape Strategy, Harvard business Review, March/April 1979. Print <br />Porter, M.E.1980. Competitive Strategy, Free Press, New York, 1980, Print<br />