Strategic
Management
in Tourism
and
Hospitality
The Hospitality and
Tourism Context
CHAPTER 3
1. define and explain the role of the external
environment in the context of the hospitality and
tourism businesses.
OBJECTIVES 2. explain strategy formulation from a contingency
perspective; and
3. explain the environment dimensions.
Introduction
• This chapter provides an in-depth
perspective of the role of the
environment and its impact on
hospitality and tourism firms. The
internal and external environments
are defined and a description of the
role of the external environment and
its impact on the business is
elaborated on from a strategy
formulation perspective.
Internal
environment
• defined as the context in which
individuals consider social and physical
aspects while making decisions.
• consists of firm's own resources and
capabilities
• involves Strength and weaknesses of the
organization
✓ Components of internal environment:
1. human resource
2. organizational function
3. organization level
External
environment
• refers to the individuals,
firms, processes, and
institutions that affect the
firm.
• they may bring opportunities
and threats.
Characterizing Strategic Analysis
the External Involves considering the major influences affecting the
organization’s ability to fulfill its mission in terms of
Environment resources and environment.
SWOT analysis
✓ is the procedure of recognizing strengths, weaknesses,
opportunities, and threats.
✓ lays out a situation analysis of the firm regarding its current
position in a given market.
• Companies must deal with the forces by ensuring that the
internal resources and capabilities are aligned with the
opportunities to tap them as they appear in the firm’s external
environment
• Likewise, organizations must be able to counter the threats
posed by the changes in the environment.
Strategic Fit
-the alignment between the
firm’s internal resources and
capabilities and external
opportunities
-“fit” ensures that firms can
align themselves with
emerging opportunities.
Strategic Fit?
Internal Resources and Opportunities
Capabilities
With the record revenues of $11.7 generated
in 2011, Starbucks possesses sufficient
amount of financial resources in order to
engage in new product development in a New product development
successful manner
Necessary amount of expertise and
resources are possessed by Starbucks so Increasing the range of target
that the range of target customer segment customer segment
can be increased
• firm’s posture toward its environment in terms
Strategic of identifying the opportunities and threats and
positioning it to address them by acquiring
intent resources and capabilities ahead of time.
Competitive
Advantage
• the advantage that firms are
able to create in the
marketplace by being ahead
of competition during the
time horizon over which
existing resources and
capabilities are used to the
fullest extent.
Environment
Characteristics
Terms used to describe the environment
include:
✓ environmental uncertainty,
✓ environmental volatility,
✓ environmental munificence
*the quality or action of being lavishly generous; great generosity.
Environment Dimensions
There are two environmental dimensions in literature:
✓ simple complex dimension
✓ static-dynamic dimension.
- the number of factors or variables that influence the
simple complex environment
• The fewer the factors, the more stable the environment. The
dimension greater the number of factors, the more complex the
environment.
static- - the degree of change over time related to the factors or
variables pertaining to the internal and external environments
dynamic • The lesser the change, the more static the environment and
vice versa.
dimension
It has two subdimensions
which are the following:
➢ the degree of change over time
(stability/instability) in the factor that
firms’ manager consider during the
decision making process
➢ the frequency with which the decision
makers consider new or different factors.
CONCLUSION
• The characterization of the external
environment in relation to its dimensions
and how strategic fit and intents can be
used to tap opportunities and counter
threats have been discussed in this unit.
The hospitality and tourism firms are often
in a competitive environment, and the need
to understand the environment they
operate in cannot be undermine.
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