Global Business Environment: Hospitality and Tourism Strategy Analysis

This essay provides a holistic analysis of management strategies within the global business environment, with a specific focus on the hospitality and tourism industries. It explores the challenges and opportunities presented by globalization, competition, and technological advancements. The essay delves into key strategic considerations, including volatility, competition, market differentiation, and the impact of internationalization. It highlights the importance of adapting strategies to local market demands and addressing issues such as customer relationship management, operational costs, market superiority, stakeholder interests, and technological advancements. The essay also discusses the significance of cost efficiency, product wastage, and the impact of staff quality on revenue. Overall, it provides a comprehensive overview of the strategic management landscape in the hospitality and tourism sectors.

Running Head: GLOBAL BUSINESS ENVIRONMENT
Management Strategy in a Global Business Environment
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Introduction
Management Strategy is the craft of conducting and executing business operations with a
certain goal, objective and vision to achieve competitive advantage. The strategy ranges in all the
hierarchies of the organizational structure to maintain a course of action in the global business
environment (Deresky 2017). The historical origin of strategy is derived from the military of
ancient time which resulted in winning or losing wars. But in the current management strategy
has taken the place of older versions of strategy which is implemented in the global business
environment.
Hospitality and tourism industry is one of the biggest business industries in the world
involving many big players and business tycoons. This industry caters to the needs of
accommodation, transport, fooding and even luxury of its consumers. As the size of the industry
is huge, its stakeholders list is also quite long (Durand, Grant and Madsen 2017). Since this
industry appeals to the luxurious and lavish lifestyles of people all around the world it is the
major source of income for many countries.
The following essay is about the holistic analysis of strategy management modules in
hospitality and tourism industry. Since service sector has become the vital part of global
economy, GDPs and other economic indicators are getting influenced by it. There are many
contemporary issues in the H&T world which are discussed below.
Volatility
Formulating a strategy for the hospitality and tourism industry and that too at the global
level is a daunting task. To understand the key objectives and services which are to be provided
according to the market demands is vital (Schaltegger and Wagner 2017). Strategies which are to

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be made are constructed on environment scanning so that a link exists between the level of
business and strategy formulation.
Competition
There has been growth in the competition in the hospitality and tourism industry. Many
new players have joined this industry and have posed threat to the pre-existing hotel chains and
hospitality ventures. There is a war of rate negotiations and services in the hospitality market as
new hotel chains are providing much ore lavish facilities at cheaper rates. This has hampered the
hospitality and tourism industry in economic aspect as the profit margin has reduced
significantly (Roy and Srivastava 2017). Opening up of new restaurants and resorts in remote
places are drawing more customers which has given rise to new trends of traveling and
holidaying. There are number of offers and plans for holiday trips all over the world and all the
companies are trying to crush their opponents even if they have to do business at very low
margins and profits.
Strategy for International Domain of Hospitality Industry
Firms operating in the hospitality and tourism industry face different problems in
domestic and international business domains. There are many market-related factors which
influence the flow of business (Okumus, Köseoglu and Altin 2017). It is known that
internationalization is considered as acontingency in the hospitality and tourism industry for
formulating management strategies.If the factors of impact in the industry are calculated then
variables like, competitiveness, marketing differentiation, and modernizationare considered to be
the key. Other factors such as brand identification, distribution, promotion and advertising are
very important.

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There is a differentiation in the mind of consumers which is based on the market value of
the firm and the brand name which is used to attract more customers in the short term and long
term. This market differentiation creates confusion in the minds of foreign travelers which is
seen very commonly in the developed and developing countries (Pérez-Pineda, Alcaraz and
Colón 2017). This confusion needs to be clear in thecontext of the products and services availed
in the hospitality and tourism industry. Companies operating in the international market needs to
reduce the difference of services and products which are being offered to keep the competitive
advantage at par. Another important aspect is aninnovation which comes in the form of offers on
products and services keeping in mind the nature of customers and time of year in respective
countries when the tourist flow is at its peak.
Strategy formulation for thelocal market is very different from that of theglobal market in
the hospitality and tourism industry as the quality and range of customers varies a lot. To provide
them with best services a firm should adopt the basic generic strategy which involves leadership
differentiation and focuses (Wheelen and Hunger 2017). This industry has a lifecycle which
starts from introductory, goes to growth, then experiences a shakeout, reaches maturity and then
finally faces decline. A firm should make business strategies as per this lifecycle to derive
maximum advantage.
Complexity
The problem with this customer relationship is that it has grown very fragile in the recent
years. With the advent of globalization and technological inducement, tourists have become
aware of numerous websites and portals where they can easily get discounts and negotiate better
offers for their stay. That is why it has become tough for the hotels and tourism agencies to retain
their valued customers (Morozova, Morozov and Arifulin 2017). When the customers try to

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negotiate with the hotel management the latter gets caught up in business dilemma as they have
to comply with the rates and services which the customers are asking for either they will lose
them and the business and profit will go to their competitors. This is a major reason why it is
becoming difficult for the hotel management to retain their premium customers.
Various Offers and Services
According to the latest trend, all the companies operating in hospitality and tourism
industry offer more than one products to different groups of customers. This is one of the best
strategies as relying too much on only one product and expecting that product to do well is not
acceptable (Marco-Lajara, Úbeda-García and García-Lillo 2017). It can expose the firm towards
potential risks and downturn in the context of global operations. Having different products needs
proper management strategy to manage the operations and implementation of the respective
services to increase their output and the management should take the responsibility of handling
these multiple products.
Operational Costs and Administrative Issues
Different types of pressures are felt by large companies of the hospitality and tourism
industry (Madera, Belarmino and Belarmino 2017). Some of these pressure points are:
 Cost reduction pressure
 Revenue increase pressure
 To enhance the value of market share
 To be responsive in their respective markets
 Pressure of innovation and upgradation

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 To satisfy the interests of stakeholders and shareholders
 The issue of transferring information, data of competence among different functional area
and business units.
Large organizations of hospitality and tourism industry use the low-cost strategy at proper
locations to benefit from the economy. These firms also need to adapt the local market
demands to keep the revenue of the firm in good shape.
Market Superiority
The strategic management in the hospitality and tourism industry is facing the problem of
market superiority in which being at the top on the list of most famous and desired
companies of hospitality has become a key issue (Brodbeck, Ponzi and Fisch 2017). With
emergence of new players who have deep pocketed economic structures are posing a threat to
the previously well-established firms. New lucrative offers and services provided by the new
comes, challenges the strategic management approach of the older companies which forces
them to modify their business structure to compete with new trends.
Stakeholders Interest in Cost Efficiency
In the business world of hospitality and tourism industry networking is known to be the
most important factor for making profits and for sustainability of the firm. The cost cutting can
be done through many ways one of which is saving the wastage of products on a regular basis
which adds up to become a significant chunk of revenue loss (Lederer, Kurz and Lazarov 2017).
Big five star and seven star hotels bring groceries and other food items and ingredients on a
massive scale to provide their customers quick and quality food items and dishes. It is a matter of
pride for them to provide fast room and restaurant services to their customers. To be particular in

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this matter they prepare food items which are popular in their hotel as they know the common
choice of order of their customers.
Issues of Wastage of Products
There are many exotic dishes which require proper preparation which takes time and
large amount of ingredients. Since it is a matter of reputation for the famous hotels to provide all
the dishes in their menu they have to prepare them, assuming that all their dishes will be sold and
consumed by their customers (Kourula Pisani and Kolk 2017). If it does not happen according to
the estimate of the chefs then the entire preparation gets wasted.
Another factor in which the food items gets wasted is that if a customer orders a dish
which is very expensive and its preparation requires precision in putting ingredients when the
dish is cooked. If there is any mistake by the chef or the helping staff the entire dish gets wasted.
This adds to the wastage of products and ingredients of the hotel (Larionova, Dzhandzhugazova
and Balitskaya 2015). This causes loss of revenue for the hotel which may sound very small but
if it is considered to happen on a regular basis then there is a huge amount of food wastage which
hampers the profit share of the hospitality and tourism industry.
Issues of Revenue Loss Due to Cost Cutting in Staff Hiring
One of the biggest issues in the hospitality and tourism industry in recent days has been
the quality of staff which the hotels and tourism agencies hire. Since the entire hospitality
industry is based on the quality of products and services offered to their customers the quality
and integrity of staff plays a major role (Khudododov and Kim 2017). Since there have been an
evolution in the hospitality and tourism industry, many young students have got inclined to

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pursue their career in the industry. They join hotel management institutes where they learn
everything about the hospitality and tourism industry and the types of services they have to do
and offer for profit of their company. These management graduates dream for their jobs in
famous hotel chains.
But in recent years there have been a decline in the quality of staff in the hospitality and
tourism industry all around the world. Hospitality companies to cut down their staff expenses
hire cheap staff who know nothing about the courtesy and etiquettes which are followed in the
industry (Königová, Urbancova and Fejfar 2012). Due to this lack of knowledge and experience
they lack in providing quality services to the customers and get negative feedback from them.
This creates a negative impact on the reputation on the hotel brand name due to which the
revenue of the company suffers.
Technological Advancement
The strategic management in the hospitality and tourism industry is facing the current
issue of technological advancement which has helped the consumers to be aware of the
numerous options of hospitality companies which are available in the market. Development of
new websites and portals and even android applications of tourism companies has provided the
customers and tourists with innumerable options to book hotels and get great deals on holiday
packages (Kasemsap 2017). They book and cancel rooms and deals at their will which has
declined the surety of customer appearances and footfalls which were previously more concrete.
The strategic approach for these hospitality companies have changed to stay on the same page as
customers.

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Upgradation of technology has become must for the big and small players of the
hospitality and tourism industry which adds to the recurring cost of their operations.A good part
of their revenue goes in maintaining these online services and a portal which requires trained
professional and IT staff which is an addition to the previous workforce (Kew and Stredwick
2017). Moreover, customer awareness has increased manifolds as they need to know each and
every detail of the products and services provided by the companies and they need to be satisfied
as they have many options to switch to.
Information Overload
Information overload has become a new problem for the companies of hospitality and
tourism industry. Since the speed at which the information of customer choices searching
patterns and booking data is increasing it has become tough for the management to strategically
handle the load of data in their organization (Johnson 2017). Internet has allowed the fast
exchange of data in real time and strategic management of this issue is becoming tough for the
companies of hospitality and tourism industry as they have to keep up with the pace of changing
trends. All the big five star hotels that deploy sophisticated gadgets like sensors and other
simulation provide large amount of data on a daily basis which needs to be stored for analysis.
Managers are bombarded with chunks of data which is continuously coming to them. This
creates an information hazard for the hospitality company.
Ambiguity
There is an ambiguous atmosphere in the context of strategic management in the
hospitality and tourism industry as no one can accurately predict the performance of the
company. Due to changes in the business trends there are no specific variables and roles defined

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which leads to a state of confusion. There is a lack of clarity in the top management of every
company operating in the hospitality and tourism industry about the revenue model, customer
dealing, future predictions and variety of services and products (Hill, Wickramasekera and
MacKenzie 2017). Moreover, there has been the case of Brexit which has hampered the business
of hospitality and tourism industry in the entire Europe. There is no concrete information about
the future events and how they will shape the business of hospitality industry. Strategic
management of the companies is failing to provide the managers with proper planning and
framework with which a company can proceed in the business. Lack of knowledge among the
managers about the relationship between the plans and reality has become a common
phenomenon in the hospitality and tourism industry. Even if the management identifies the
loopholes in the business framework in time, there is no proper planning to avoid and manage
the problems which crops up in the hotels and tourism agencies.
Environmental Uncertainty
The entire hospitality and tourism industry is based on the environment of the place
where it is operating. If there is any uncertainty in its environment then it becomes a hazard. An
uncertainly can be of any nature which is political, economic or natural. Political uncertainty
affects the hospitality business as less number of tourists likes to visit places where there is a
political turmoil (Chatterjee 2017). If there is any political instability then the entire nation gets
disturbed which majorly hampers the business of hospitality and tourism industry. Another
uncertainty may be of economic nature in which the economic status of the country and its
currency depreciates. This affects the entire revenue model of the hospitality and tourism
industry as foreigners and foreign exchange of currency is the major source of income in the
hotels and tourism agencies (Ferraro and Briody 2017). Lastly, environmental uncertainly can

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completely destroy the establishments and business of the hospitality and tourism industry as
natural disasters like floods or tsunamis destroy the lavish hotels situated on beaches. All these
environmental uncertainties have been witnessed in the recent past for which strategic
management needs to be done.
Conclusion
From the above discussion, it can be concluded that strategic management in theglobal
business environment is the key to doing business in the tourism and hospitality industry. This
industry exists in both local and international market and has a great significance in the
economic and social sphere of business in the world. It relates to the cultural and political
scenarios as well as people from all over the world are affected by the type of strategy a tourism
and Hospitality Company makes. Travel and tourism firms and large hotel chains come in the
ambit of this industry which makes it huge and relevant in the working culture of thebusiness.
In recent years the hospitality and tourism industry has faced some critical issues and
challenges which has charred its business and charm. In the following discussion, analysis of the
contemporary issues in the hospitality and tourism industry will be done in details with each and
every aspect traversed in details. Since this industry has major impact on global level its issues
possess much value for the business and even for the economic front. The hospitality and tourism
industry has shaped the business trends and has helped in maintaining status symbol for many
companies. The following discussion will comprehensively cover all the contemporary issues in
the hospitality and tourism industry.
The above mentioned contemporary issues in the hospitality and tourism industry needs
to be handled with the best strategies of management. For strategy formation, some approaches

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such as planning, emergent, and contingency approaches are used according to the need and
requirement of the hospitality and tourism firms. As it is well known from the above discussion,
making one strategy to handle all situations is not possible, thescope of change must be there. To
identify and select amost appropriate framework for strategy formulation, knowledge of
previously used frameworks in the must.

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