Author: Andre Coleman

To lead and become the international benchmark in the hospitality industry, not only in India but also in the Key regions of the world and To dazzle and delight our customers with utmost quality, food and beverage experience and exceptional service standards.

The Taj Mahal hotel, Mumbai(india ) was opened on December 16,1903 under the taj group by Jamsetji Nusserwanji Tata, the founder of the Tata Group. htis hotel was incorporated with IHCL. Now currently Rs. 678 millions can be operated bythe taj hotels. t his is growing day by day and become th elargest hotel chain in the india. The Taj Mahal Palace & Tower is one of the famous five star hotels in india and it is regarded as the most prestigious luxury five star hotel. This hotel is 105 years old hotel having the heritage building under the group of taj hotel resorts and palaces. The hotel taj mahal contains 565 rooms.this hotel was opened in 1903 commisioned in Indo-saracenic style by Tata. the hotel taj made unique history from his service sand and give best service sto their customers and supportive fro every need.it has marvellous artitecure which brings together Moorish , Florentine and oriental styles. It is a gracious landmark of Mumbai as it provides panoramic views of the Arabian Sea and the Gateway of India.

On novemeber 2008 , during the series of terroroist attacks in mumbai , the hotel taj marriot was under attack of the terrorists there is a big damage in the hotel including destruction of roof and about 167 hostages were therehe. After this attack the management of hotel annouced thathe hotel will be repared and the expenditure to repair it will be INR 5 billions and it will take 12 months to repair. In july ,209 , Hilary Clinton visit the Mumbai taj hotel and stayed there

as the patway to improvement the hotel taj mahal,in October 12, 2006, the Company approved the Scheme, under Sections 391 to 394 of the Companies and this scheme was approved by the High Courts.

In July 2002, the hotel has won several international awards. The Taj hotel Group also obtained licenses to manage and operate two leisure hotels; the Rawal-Kot, Jaisalmer and Usha Kiran Palace, Gwalior in October 2002.

Taj Group access to the midtown and North Mumbai market. The hotel has since been renamed as the Taj Lands End, Mumbai. An din tear 2003 the hotel taj celebrated its centenary of the opening of its flagship hotel.

In 2004 it opened its first luxury service apartment Wellington Mews.

The Taj Mahal Intercontinental Hotel in Mumbai consist of 582 rooms which are fully air condodtione dwith 49 suits.each room is equipped with data port , speaker phones , with IDD ,fax available , sea cty fcing rooms TV and satellite rooms , 24 service fro laundary service with eminent club rooms. This hotel in the Mumbai provide the top most services in the luxury hotels and majestic accommodation.

During the recession period

After the terrorist attack in 2008 taj has to face the financial problems and to rasise up from it this affects the occupancy rate of the hotel and to improve the occupancy rate the hotel offered the suite of $6750 per offer to attract te tourist . the torist in hotel taj came from the worldwide.after the attack the hoyel made a a mable memorialin the lobby for 131 guests and staff who died in terrorist attack. Now they have improved their security system by putting xray machines ansd metal detectors on the screen guessts at the entrance of the vechicals.

According to business weekly news there is decline of 5.8 %in Mumbai for shares in Indian hotelsltd. Operator of taj brand .

Beside of all these taj is one of the original grand hotel in the world. With the passing of time its reputation spread and grew constantly.

LITERATURE REVIEW

Literature review:

Two major reasons exist for reviewing the literature. The first, the preliminary search that helps you to generate and refine your research ideas. The second, often referred to as critical review, is part of research project proper. (Sharp and Howard, 1996)

Most research books argue that this critical review of literature is necessary.

After through studies of different Export and import books and literature, I have found that only a small portion is dedicated to the buyers’ and sellers’ behavior and most of the focus is given to, how to export and import.

No doubt these were not adequate information to compete my research that’s why I decided to search more and more information on topic and now hopefully I have gathered adequate information to deal with my Research methodology and to support my arguments. And this information, gathered from journal and articles will focus on the British and Pakistani textiles buyers’ and sellers’ perspective.

The literature used in this research will also help in analyzing the issues and results critically either by comparing different point of views of different authors or by quoting statements in the favor of results. To gain product’s knowledge I will use my observations and company documents.

Deductive approach:

“A theory/hypothesis is applied/tested by the collection of data.”

I shall use the literature to help me to identify theories and ideas that I shall test using data. I shall also develop a theoretical or conceptual framework which I subsequently test using data.

Inductive approach:

“Theory is developed after the data have been collected.”

I will be planning to explore my data and to develop theories from them that I shall subsequently relate to the literature.

Review purposes:

The literature review has a number of purposes. Many of these have been highlighted by Gall et al. (1996). These are

To help you to refine further your research question(s) and objectives;

To highlight research possibilities that have been overlooked implicitly in research to date;

To help you to avoid simply repeating work that has been done already;

To sample current opinions in newspapers, professional and trade journals thereby gaining insight into the aspects of your research question(s) and objectives that are considered newsworthy;

To discover and provide an insight into research strategies and methodologies that may be appropriate to your own research question(s) and objectives;

To discover explicit recommendations for further research. These can provide you with superb justification for your own research question(s) and objectives;

Literature sources available:

The literature sources available to help researcher to develop a good understanding of and insight into previous research can be divided into three categories:

Primary (published and unpublished)

Secondary

Tertiary

Primary literature sources (also known as grey literature) are the first occurrence of a piece of work. They include published sources such as reports and some central and local government publications such as white papers and planning documents. They also include unpublished manuscripts sources such as letters, memos.

There are so many published sources available from where I can get enough information about my research topic. Pakistani government published so much material on the export of Pakistan Textile industry. I read that publications and I got a good idea about the behavior of the Pakistani sellers’ and also about the buyers’ of the Pakistani Textile products.

I also reviewed the reports, which are published by the British government about the import of the textile products from different countries. This is also helpful for my research topic.

Secondary literature sources such as books and journals are the subsequent publications of primary literature. These publications are aimed at a wider audience. They are easier to locate than primary literature as they are better covered by the tertiary literature.

There is book by Nasim Yousaf with the title Export & Import Apparel and Textiles from Pakistan will be quite helpful for my research. In this book there is so much information about the Pakistani textile industry and there is also some information about the buyers’ and sellers’ behavior.

There is also enough information about the topic in so many articles and journals, which are written, by the Pakistani authors and British authors. From these articles and journals I got so much information about my topic. This will be helpful for me in the future.

Tertiary literature sources also called search tools, are designed either to help to locate primary and secondary literature or to introduce a topic. They therefore include indexes and abstract as well as encyclopedias and bibliographies.

Export Promotion Bureau of Pakistan has a uploaded a website and on that website I found so much relevant material about my research topic. In that website there is so much information about the, share of Pakistani textile products in the international market, the information about the main buyers and sellers of textiles products, about the quality of the Pakistani textile products, in that website they also discussed the buyers’ expectation from the Pakistani seller. So this website of Export Promotion Bureau Pakistan is also a good source or information for my research topic.

http://www.epb.gov.pk/epb/index.jsp

Evaluating the literature:

For evaluating the literature two questions frequently asked ‘how do I know what I am reading is relevant?’ and ‘how do I know when I have read enough?’ both of questions are concerned with the process of evaluation.

You should, of course, read all the literature that is closely related to your research question(s) and objectives. The literature that is most likely to cause problems is that which is less related (Gall et al.; 1996).

After collecting all the information from all of the sources then I will evaluate my literature that what is much important for my research and which is less important for my research topic. I will evaluate the literature by keeping some important in my mind like how recent the item is, do it have enough references, does the item support my research topic etc.

Research Design and Methodology:
The research philosophy:

The research philosophy refers to the fundamental approach that research should be conducted. There are three views about the research process dominating the literature: positivism, interpretivism, and realism.

The mixed approach will be applied in my research work, primarily because the subject matter is largely intangible, open to subjective interpretation and based upon social interaction. As Saunders et al (2003, p99) point that: ‘there are two major advantages to applying multi-methods in the same study. First, different methods can be used for different purposes in a study. Secondly, it enables triangulation to take place’.

Qualitative Approach:

Secondary Research:

Published data that is

Books about the export of Pakistan textiles and also about the buyers’ and sellers’ behavior of the Pakistan textile.

Articles and Journals on Pakistan textile export for UK

Chamber of Commerce Documents

Internet Websites

Past conducted research

Print and electronic media

Primary Research:

Personal experience and observations:

As I have worked in this industry that’s why I know the trends in textile and the rules against conducting this business. I also have the idea of Britain buyers’ behaviors and about their needs and expectations.

Pure Research:
The research conducted for the topic will be pure and it will discuss the core issue for the sake of improving knowledge. It will directly discuss about the buyers’ and sellers’ behavior for the Pakistan textile industry in a theoretical way.

Inductive Approach:

My approach towards data gathering will be inductive, as it is a flexible structure to utilize all the data in your research findings and also based on qualitative data with a slight involvement of quantitative data.

JUSTIFICATION

HYPOTHESIS

METHODOLOGY

RESEARCH REPORT

2. SECONDARY RESEARCH

PRIMARY RESEARCH

QUALITATAIVE QUANTITATIVE

SCOPE

LIMITATION

ETHICS

Azerbaijan, as a country situated in the Caucasus has a very advantageous location for tourism, but tourism is not a leading sector in Azerbaijan. The most important industry here is oil sector as Azerbaijan has very rich oil reserves and economy depends and develops on the oil industry. Over 90% of annual income comes from our oil industry and the difference between oil industry and the others is huge. So that’s why Azerbaijani government wants to cover this difference and the best way is to improve tourism sector because we have the potential. Even in the world tourism is the second biggest industry after the oil sector.

Most of the tourists coming to Azerbaijan are business travellers and the reason is oil industry again. That is why the hotels are mostly specialized in business tourism. There are some hotels that I would like to mention: The Landmark Hotel, Hyatt, Ramada Baku, Radisson SAS and Park Inn. As a best practice in sustainable hospitality experience I would like talk about Hyatt. In comparison with above mentioned hotels, Hyatt Hotels Baku has a real professional background and prosperous experience in hospitality industry.

Contribution to the Body of Knowledge

Actually there have been done no studies and researches on sustainability of the hotels in the market in Azerbaijan that made it a challenge to discuss the topic with extremely lack of information given. Therefore, this thesis can be accepted as one of the first researches on the sustainability of the hotels in the market, but not in respect to the environment and nature.

Research Questions

While working on this topic I am going to find answers to the following questions:

What is the current situation in hospitality industry?

What are the barriers for sustainability of hotels?

Which are the ways of breaking the barriers of hotel’s sustainability?

SWOT analyze

What are the recommendations and suggestions for sustainability?

Methodology

This thesis will be done by hermeneutical kind of research as I am going to search existing literature, statistical reports, articles, etc. While reviewing these materials I will analyze and gather all necessary information and give a final report on sustainability of hotels.

In order to get intended information about the hotel I have contacted the sales & marketing manager of Hyatt Baku Mrs. Bahar Dadashova. So far we had only one conference call to inform her about my intention, however in the run of the thesis we will keep in touch.

Definitions

This chapter gives an overview of the different definitions of sustainable tourism. On the other hand, some studies done concerning kinds of sustainable tourism itself. So far, these definitions give an idea about sustainable tourism and its main factors.

Sustainable Tourism

Sustainable tourism development is defined by the Word Tourism Organisation (WTO), as a development that “meets the needs of present tourists and host regions while protecting and enhancing opportunity for the future. It is envisaged as leading to management of all resources in such a way that economic, social, and aesthetic needs can be fulfilled while maintaining cultural integrity, essential ecological processes, and biological diversity, and life support systems” (World Tourism Organisation (WTO), 2003). Based on the Rio de Janeiro Declaration on Environment and Development, 12 guiding principles of sustainable tourism are set in the Agenda 21 for the travel and tourism industry (United Nations Environment Program (UNEP), 2002). In the tourism context, sustainable tourism is often associated with nature orientated tourism or eco-tourism (Eagles et al., 2002) and has become central in the debate on environmentally integrated tourism development (Gossling et al., 2002).

Tourism in Azerbaijan

Sustainability of the hotels in Azerbaijan is very young as the tourism industry itself. The Republic of Azerbaijan was established in the early 1990s. Since the establishment economy of the country was depending on oil industry. 95% of the budget was contributed by the country’s oil industry.

The best alternative to cut down this dependency on oil in the budget is to develop tourism industry. Azerbaijan has very good potential for tourism; high mountains, beautiful forests, ancient history, different historical sites and monuments, lots of artists, poets etc.

The Ministry of Tourism and Culture of the Republic of Azerbaijan was established in 2005. One year later Azerbaijan Tourism Institute (ATI) under the Ministry of Tourism and Culture of Azerbaijan was opened. ATI is established in order to cover the lack of qualified staff in tourism sector which is a global issue in world tourism industry as well.

Sustainable Tourism in Azerbaijan

As it was mentioned above tourism sector in Azerbaijan is young compared to the other industries. Talking about sustainability of the hotels in Azerbaijan we can only mention very few hotels e.g., Hyatt Hotels Baku, Radisson SAS Baku.

The names mentioned above are one of the first hotels in Azerbaijan. They are still operating successfully and still very strong in the market.

To go back to the Soviet Union period then we can talk about the Hotel Azerbaijan and Absheron Hotel. Those hotels had a big market share as well and were very popular at that time. They had been operating for a long time. The sustainability factors were;

Good location

Contribution by the government

Best service for that time

Best staff

Since 2005 these both of the hotels were destroyed one after another and now there are 2 big constructions going on; Hilton and JW Marriott.

The JW Marriott is replacing Baku’s famous Absheron Hotel, which has been demolished, and will be part of a mixed use development designed by ReardonSmith to include 16 floors of private residences, serviced apartments, retail and offices as well as the 20-storey hotel. The architects had a number of key considerations to balance in their concept: location, the high water table, local conventions and successful hotel operations and of course, the client’s aspirations for this important building. The result is a unique design that makes a virtue out of addressing these potentially competing dictums.

The Hotel “Hilton Baku”, which is being built in Baku on Azadlig Avenue (instead the hotel “Azerbaijan”), will be commissioned in August 2011. The total area of five-star hotel “Hilton Baku” is 42,160 square meters. The hotel will consist of 25 floors and 308 rooms. There will be elevators with panoramic views, different restaurants, concert and exhibition halls, recreation centre at the 670 square meters, sports and fitness centres and swimming pools in the hotel. A bar, which rotates 360 degrees and covers the entire panorama of Baku, will be located on the top floor of the hotel.

Hyatt Hotels

Global Hyatt

I guess this is the only hotel that actually stopped growth of the company related to its policy: Global Hyatt has concentrated on high-end segment, but nevertheless it is among the ten largest. In 2007, the chain launched an innovative hotel brand Hyatt Place, where everything is created based on the results of surveys carried out among the discerning tourists. The hotel is not only providing exclusive services but also tries to make emphasize on its buildings and design.

History

Hyatt Hotels Corporations well-established reputation as an industry innovator provides a wealth of inspiration as the company looks forward to its next era of creative hospitality. Known around the world for its brands – Hyatt Regency , Grand Hyatt , Park Hyatt , Hyatt Place , Hyatt Summerfield Suites and Andaz – the entire collection of Hyatt hotels and resorts weaves together authentic service with leading technology to offer its guests unique restaurants, luxury accommodations and distinctive spas. With its new initiatives and design elements continuing to evolve, the next half-century of Hyatt innovation will continue to provide its guests a world of uncommon travel experiences. Hyatt Hotels & Resorts opened its first property, a small motor hotel at the Los Angeles International Airport, in 1957 and its portfolio quickly grew to include several other modest hotels along the West Coast and in Chicago over the next ten years. In 1967, Hyatt opened its first major John Portman designed hotel, Hyatt Regency Atlanta, in Georgia, which featured a space-age design with a dramatic, 21-story atrium lobby. The revolutionary architecture spawned scores of atrium lobbies around the world, effectively changing the course of the lodging industry and reshaping the Hyatt brand as an innovative and significant global hospitality leader.

Hyatt successfully distinguishes itself within the competitive hospitality marketplace with six different brands, each designed to deliver experiences attuned to the lifestyles, attitudes, values, and aspirations of the guests for whom it is designed. The 2007-launched Andaz brand is sophistication made simple delivered with a genuine warmth; Hyatt Regency enables productivity and revitalization within a responsive, convenient and contemporary environment; Park Hyatt , a discreet and refined collection located in fashionable cities around the world, epitomizes modern luxury; Grand Hyatt properties are some of the most architecturally dramatic hotels in the world, offering stunning design and a myriad of innovative food and beverage concepts; Hyatt Place is designed for the 24/7 lifestyle of today’s multi-tasking business traveller, and Hyatt Summerfield Suites , a reinvention of the all-suites, extended-stay hotel, features timely amenities and inviting, residential design.

As a unified portfolio, Hyatt’s properties share core values across the Hyatt brand: exceptional guest service, upscale amenities, popular food and beverage programs, and innovative interior designs that incorporate local art and style. Currently offering travellers a choice of more than 365 hotels and resorts in over 45 countries, Hyatt Hotels Corporation continues to build on its commitment to clients, staff, partners and the environment as it grows its dynamic vision for the future of hospitality.

International chain

Hyatt Corporation is one of the leading hotel companies in North America. Owned by the Pritzker family of Chicago, Hyatt manages or licenses the management of 87 hotels and 16 resorts (with a total of 55,000 rooms) in 83 cities in the United States, Canada, and the Caribbean. In addition to its resorts, Hyatt has also developed other special hotel concepts–the Grand Hyatt, the Park Hyatt, and Classic Residence by Hyatt. Grand Hyatts are large-scale, higher priced hotels located in culturally rich cities, with three in the United States (New York, San Francisco, and Washington, D.C.). Park Hyatts are modelled after small European hotels and are located in Chicago, Los Angeles, San Francisco, and Washington, D.C. The Classic Residence by Hyatt properties offers luxury retirement apartments for rental. Starting in the mid-1990s, the company has also sought growth opportunities in franchising, time-share properties, free-standing golf courses, and casinos.

Hyatt Hotels Baku

Hyatt Hotels Baku consists of 2 hotels -Hyatt Regency Baku and Park Hyatt Baku Hyatt Regency Baku was reconstructed and opened in 1995; second renovation was implemented in 2005; Park Hyatt Baku was open in 1999 and most of the rooms were refurbished with new facilities in 2008

Best Sustainable Hotel Chains

InterContinental Hotel Group

Since 2004, this hotel’s chain became the largest in the world. To date, it owns more than 600 thousand hotel rooms, scattered across the globe. Each year their number is being increased by 5,9%, mainly due to the expansion of Holiday Inn Express, but also because of the increasing number of hotels Crowne Plaza and the emergence in Europe, Staybridge Suites and Indigo boutique hotel.

Marriott International

The company claims that every year, growing by 4,7% and in the near future has plans to build 800 hotel and add to the existing 500 thousand rooms 125 thousand more. The Group also promises to invest a lot in pre-existing ones, including the Marriott floor, numerous brands, covering all niches of the hotel business from budget options for poor tourists to luxury hotels for the discerning VIP-persons.

Hilton Hotels

Ranking as the fourth largest chain, this brand is popular not only with luxury hotels, but also because of the scandalous Paris Hilton’s escapades, the former heir to the empire hotel room. The company is known propensity for innovations: the first one of its owners have introduced a system of “star” ratings, equipped hotel with Wi-Fi. However, the chain began to suffer losses, and in 2007 the former owners were forced to sell the hotel business group Blackstone. In 2008 net increased with 300 new sites, and the growth of the company was mainly due to expanses of the United States. But the emergence of the company’s portfolio of brands Doubletree, Homewood Suites, and especially the Hilton Garden Inn and Hampton Inn, as well as the construction of Hilton Hotel in provincial Russia say the desire to start taking over the world.

ANALYZING THE general statement

Hyatt Hotels in Azerbaijan

Hyatt Hotels Group is focused on enhancing the brand preference by continuously improving the performance of their existing hotels and successfully expanding the presence of their brands in select markets worldwide. Smart growth and development is fundamental to achieving these aims. As a company, they add hotels in locations throughout the world where their loyal guests and customers want them to be. Hyatt team works closely with the development partners to ensure their success through innovative and efficient design, operational excellence and effective sales and marketing strategies. Hyatt Hotels are focused on the role of development within the organization and have formed a dedicated and experienced global development team. Hyatt Hotels Baku is committed to establishing a reputation as the leading hotel complex in Azerbaijan and the Caucasus region. Their service is known to anticipate, meet and exceed the guest expectations.

In order to retain the established position as the market leader in Baku, they focus on the quality of the operation, the physical aspects of both of the hotels, safety and security as well as creating exciting, innovative and trend setting products throughout.

Management

Widely recognized and industry leading brands of Hyatt Hotels have consistently received top rankings, awards and accolades for service and guest experience from independent publications and surveys, including Travel and Leisure, Mobil and AAA. The mission of Hyatt is to provide authentic hospitality by making a difference in the lives of the people. They focus on this mission in pursuit of the goal of becoming the most preferred brand in each segment that they serve for the associates, guests, and owners. Hyatt Hotels support their mission and goal by adhering to a set of core values that characterizes their culture. Globally, they manage, franchise, own and develop Hyatt branded hotels, resorts and residential and vacation ownership properties around the world. As of March 31, 2010, the company’s worldwide portfolio consisted of 434 properties.

Sales & marketing department of Hyatt Hotels Baku

Sales and Marketing department in Hyatt Hotels Baku consists of 8 employees which are-Director of Sales, Catering Manager, 2 Banquet Sales Managers, 2 Rooms Sales Managers, Sales Executive and Revenue Analyst. Besides, there can be Sales Admin Assistant, Sales Coordinator, Regional Director of Marketing, Marketing Communications Manager. Hyatt’s worldwide Sales and Marketing teams strive to build brand preference and drive revenue to our hotels. Our sales and marketing strategies are rooted in a comprehensive understanding of our customer segments, the current dynamics of the marketplace and the most effective use of new technology and media platforms. Hyatt’s marketing strategy is designed to secure and build brand value and awareness while meeting the specific business needs of hotel operations. Building and differentiating the brand position of Hyatt and our sub-brands is fundamental to increasing Hyatt’s brand preference and demand, rate premium and related business imperatives. Hyatt is focused on targeting the distinct customer segments that each of our brands serves and supporting the needs of the hotels by thorough analysis and application of data and analytics. There is a coordinated and integrated communication strategy for the Hyatt master brand and each of the sub-brands across every distribution channel.

Promotion of Hyatt Hotels Baku in the World

Hyatt’s Central Reservation System is an important contributor to the performance of the hotels system wide. The system booked 11.8 million room-nights in 2008, representing approximately $2.3 billion in rooms department revenue. Reservation centres are located in the United States, Australia, India, UAE, Germany, Japan and China to provide 24/7 access to prospective guests. Hyatt Hotels work closely with the distribution partners to ensure that they maximize market share across all channels. These include traditional travel agencies (e.g., American Express, Carlson Wagonlit), online travel agencies (e.g., Expedia, Travelocity and multiple regional agencies, etc.), opaque agencies (e.g., Priceline, Hotwire) and multiple user-generated sites that link back to Hyatt.com (e.g., Trip Advisor). Hyatt also has extensive marketing partnerships with all global and regional airlines.

Product knowhow

Hyatt Baku Hotels offers unmatched variety of facilities and services within one complex, including business and communication technology, vast fitness and relaxation facilities, an array of dining and entertainment opportunities, shops and offices. The USP of Hyatt Hotels Baku is: favourable location and convenient access to select business centres and government offices; the only complete lifestyle complex in the city, featuring 2 hotels, office and residential facilities, wide variety of F&B Outlets, multifunctional meeting and conference facilities and state-of-the-art Health and Fitness Centre; largest global distribution / reservation system; largest inventory of suites present in the city suitable for large VIP government groups.

Contribution from the Hyatt Hotels International

Hyatt’s properties and preopening sales offices are supported by a network of salespeople in key markets around the world. Sales professionals represent all Hyatt destinations and focus on all relevant market segments e.g., corporate accounts, M.I.C.E. accounts, key wholesalers, travel agencies and luxury travel specialists. Additional support is provided to hotels with dedicated resources managing programs such as Virtuoso American Express Fine Hotels & Resorts. The network includes offices in New York, Chicago, Los Angeles, San Francisco, Washington D.C., Mexico City, London, Mainz, Sydney, Melbourne, Riyadh, Tokyo, Hong Kong, Singapore, Beijing, Shanghai, Bangalore, New Delhi and Mumbai, as well as additional coverage throughout Continental Europe. Each office is responsible for ongoing support of the Hyatt portfolio. Additionally, each office coordinates the presentation of Hyatt and Hyatt’s sub-brands at important industry events and shows such as ITB, World Travel Market and Asia Luxury Travel Market. Hotels also have the opportunity to participate in annual Hyatt fairs and sales calls coordinated by each worldwide sales office. These events provide the hotels with face-to-face access to Hyatt’s best existing and potential clients.

Competitiveness of Hyatt Hotels

Currently eight five-star international hotels are under construction in Baku. This is not just about attracting well-heeled tourists, as Baku still has a relatively small demand for luxury hotels. It is about making Baku competitive as a mega-event Mecca. Baku will be promoted as a site for “conference tourism,” Gurbatov, the tourism official, said. “Each year, Baku hosts more government-sponsored conferences and other events. But the creation of the appropriate infrastructure — luxury hotels, large expo-centres, convention centres, conference halls and stadiums — will allow the government to bid on hosting large-scale international events.” One 33,800-square-meter exposition centre opened in Baku in May; the government has also begun construction of a 60,000-seat soccer stadium. The sprawling 90,071-square-meter Heydar Aliyev Cultural Centre, designed to look like rippling waves, will open in 2013. Attracting sporting events and conferences to these venues “is a matter of both the country’s prestige and commercial profit from foreign visitors,” Gurbatov added. For now, expectations run high that the owners of the new hotel under construction will benefit from their investments – assuming that the government succeeds with its “conference tourism” strategy. Commented Kenan Aslanly, an analyst at Baku’s Public Finance Monitoring Centre: “If this strategy is successfully implemented, the country will win both economically and politically.”

Jumeirah will be the first new hotel to open in 2011. Jumeirah will have reasonably strong brand awareness in Baku, since a) Dubai is a very familiar weekend / holiday retreat for Azerbaijanis and b) Middle-Eastern and Persian business is growing in Baku due to the development in the city with Dubai as an “ideal”. Jumeirah is located close to the President’s Dacha, approx 15 minutes outside the airport (45 minutes from city centre).

The President will use this hotel to host visiting diplomatic delegations and Ministry conferences due to the close proximity to the airport, Buta Palace conference centre and to his summer residence / Dacha, where he resides between April – October every year. This will affect Park Hyatt, as we currently get the majority of this business. It will also affect Hyatt Regency when it comes to groups and associations (e.g. sport groups) which look for a secluded place with spaces for outdoor activities (pools, golf course, tennis etc), and groups looking for a location outside the city centre to avoid late party nights.

The Marriott (80 room inventory) is located close to Jumeirah. Due to a small inventory and inconvenient location, it will not impact Hyatt much, despite being a well known, international brand with an aggressive opening-strategy to drive occupancy. JW Marriott (228 room inventory)will open Q1 2012.Located at Baku’s Freedom Square – a national symbol and location of military parades – as well as the seafront boulevard with the Caspian Sea beyond. This hotel will also have to compete in the corporate market to achieve occupancy. Hilton will open in June 2011 and is located right next to Park Inn, sea side in the centre of the city. The two hotels have the same owner, something which is of great concern for Park Inn. Park Inn opened in 2005, but is still worried about getting a new, international brand as competitor- and has great concerns about losing corporate agreements for companies located around the hotel and group business. Landmark is also very concerned about this new entry on the hotel scene. We think the Hilton will also affect Hyatt Regency, – both for groups and transient business. Fairmont is the largest of the new hotels; the hotel will also have to compete in the corporate market to achieve occupancy. They will be able to offer moderate corporate rates due to the size of the property, and due to the location we can expect companies and individuals visiting for meetings with ministries etc to perhaps choose this location. Hyatt used to be a good location as we are only a 5-10 minutes drive from the parliament and several ministries. Four Seasons hotel is scheduled to open late 2011. Park Hyatt is currently the only official protocol hotel in Baku, but it will mainly lose this status once Four Seasons is opening. The hotel will be more or less purpose built to host high-ranking government officials, diplomatic visits, VIPs etc., with a 3-bedroom Presidential suite and several 3-bedroom and 2-bedroom suites and a room type called “Deluxe deluxe” with two king beds in the same room (suited for the American- and Asian market). Four Seasons will also have a 330 m2 ballroom. Sheraton is still a project to rebrand the Airport hotel (ex Holiday Inn)

Sustainability of Hyatt Baku Hotels

Hyatt Hotels Baku has started operating in Azerbaijan since 1995. First, Hyatt Regency was opened in 1995 after the aˆzContract of Century” (Baku-Tbilisi-Ceyhan oil pipeline). Then in 1999 due to the high demand Park Hyatt was opened next to the Hyatt Regency. Till 2004 both of the hotels were very strong and almost alone in the market. The only competitor was Radisson SAS. In 2004 another brand Park Inn penetrated into the market. Since then the market share of Hyatt Hotels in Baku is decreased slightly. Because still the demand is high and accommodation facilities are not enough to meet the need. Currently, Baku features only a few luxury hotels run by international chains — the Hyatt Regency, Park Hyatt and Radisson SAS, Park Inn and Airport Hotel. If Azerbaijan’s Eurovision contestant, Safura, had triumphed at the annual pop extravaganza this year, Baku would not have had the facilities to host the event in 2011, noted Faig Gurbatov, national coordinator of the government’s Tourism Development Project, an initiative run jointly with the United Nations Development Programme.

Since the 1995 to nowadays both of the Hyatt Hotels in Baku were operating very successfully. This is a main factor showing its sustainability.

Demand

Demand for Hyatt Regency and Hyatt Park (Baku) is quite high. The average occupancy rate (annually) is around 69%. In high seasons this figure increases up to 90-95%.

Target Market

One of the components needed to apply hotel revenue management is market segmentation. It allows you to target and market to a variety of consumer groups with different behaviour with an offer that matches their needs and budget level.

Your hotel market segmentation shall help to identify the purpose of the trip: either business or leisure. The price does not decide of the market segmentation. Clear distinction must also be achieved between individual and group business .The market segmentation shall help you identify the trends of your business:

Length of Stay

Day of Weeks stays

Total Revenue per room, Total Revenue per client

Lead Time

Cancellation

No Show ratio

Due to the last trends in Azerbaijan 3 industries are increasing rapidly e.g., oil business, pharmaceutical industry and information & telecommunications sector. Guests from the above mentioned industries are coming to stay at Hyatt very often. Also, the number of governmental officials and walk-in tourists is high enough.

Maritz guest satisfaction survey (Benchmarking)

Since the competitor hotels give wrong information, Hyatt International has decided to change their strategy. Now, Hyatt Hotels are not doing benchmarking. Hyatt Hotels Baku uses the services of Maritz.

Maritz is a guest satisfaction survey. Maritz protects the data about the companies by the world-class policies and procedures. Maritz has developed a security program which includes:

Physical Security and Controls

Network Architecture and Security

System and Remote Access Controls

Application Security

Database Security

Call Centre Security

Security Administration

Intrusion Detection

Change Management

Data Back-up and Retention

Business Continuity and Disaster Recovery

Guest Satisfaction Surveys

As many hotel chains Hyatt hotels International check the guest satisfaction level. In order to obtain the information about the service quality and better to understand the needs and wants of the guests.

Hyatt Hotels Baku is also conducting such kind of surveys in order to get the needed information. Mostly the comment cards are used in hospitality sector. Either the cards are put on the table in the rooms or reception provides with comment cards at the check – out.

As I have mentioned already, I had a meeting with the sales & marketing manager of Hyatt Hotels Baku. She showed me a guest comment card.

How would you rate the quality of the food?

How would you rate the service quality?

Please rate the cleanliness of the facilities.

Please rate the friendliness of the staff.

Please rate your overall experience.

How likely are you to refer us to a friend?

Each question can get minimum 1, maximum 5 points from each respondent. The points from each respondent per question are added together. Then they calculate the percentage out of the maximum e.g., 3 respondents answered the 1st question and the results were 5, 4 and 3 points.

5+4+3=12

12*100/15=80%

(15) is the maximum number of points for 3 respondents

With the results of this short survey conducted among the guests of Hyatt Baku Hotels you can get to know in the chart below:

Figure 1: Guest satisfaction survey chart

Guest portfolio of Hyatt Hotels Baku by the regions

The guest of Hyatt Regency and Park Hyatt are very multi-national. All around the world guests come to stay at Hyatt. Mainly the guests of Hyatt Hotels Baku are Europeans, from GCC and North America.

SWOT Analysis

Figure 3:

Strength

Weaknesses

Internationally recognized brand

Global reservation system with the link to all GDS distributors

Quality service and facilities

Excellent F&B choices

Known Health & Fitness facilities

Extensive room & suite inventory with two hotels

Increased sales presence

NFPA – standard life safety

Multi – lingual/ international staff

WWSO’s

Some companies perceive Hyatt as expensive Hotel considering it only for the management

Location away from the city business district is a barrier to some companies

All hotels offer complimentary Internet facilities, unlike Hyatt, where the service is perceived too expensive by corporate travellers

Opportunities

Threats

Brand awareness for potential acquisition.

To be in line with modest technologies and systems

Constantly work on improvements

Active promotion on local market

Upscale fitness facilities is a very strong decision making point for hotel choice on the market

Luxury room inventory and good balance between suites and standard rooms is a strong asset to target any business opportunities in the market

Continue building necessary networking and be aware of latest market trends

Additional distribution channels

Brand restrictions do not allow to compete with lower brand rate offers

Create inconveniences in acquisition of leisure business

Internet is still very expensive, thus it affects in decision making process for most of organizations

The London Marriott Hotel Grosvenor Square is a 5 star hotel that is located in the Central London near to the Oxford Street and Park Lane. It is one of the classic hotels in England. The hotel has 236 luxurious bedrooms and 45 Club Level bedrooms with many facilities like Club Lounge, Wi-Fi Internet access, versatile meeting and event space, Maze Restaurant, Maze Grill, Complimentary, fitness centre, 24-hour room service. (MARRIOTT, 2010)

The hotel is located in Central London which has many tourist spots and centre of attractions around the locality. Some of the tourist spots nearby the hotel are: The London Eye, Buckingham Palace, Theatre district, Madame Tussaud, Covent Garden, Big Ben and the Palace of Westminster, Oxford Street/Bond Street shopping, The Tate Modern, The British Museum, Big Bus London Tours, The Tower of London. These tourist spots are within walk able distance from this hotel which attracts more of tourists. This saves them a lot of money from spending on transportation. Thus, tourists choose this hotel for their stay so that they have much more time to explore these tourist spots.

As mentioned above Central London is not only a tourist spot but also a place full of Information Technology corridor and some of the main industry’s head quarters are located here as well. The business customers and corporate choose this hotel because it saves a lot of time and money. Marriott also provides good banqueting and boardroom facilities that are used to organise meetings and the banquets are also put to good use. The hotel provides lots of facilities and services to the corporate such as group check in, bill to the company etc. which provides good hospitality.

The hotel also includes ‘The Maze’, which is a restaurant created by the world famous celebrity Chef Gordon Ramsay. It’s one of the famous French and Asian blend restaurants in London. Thus this is one of the key reasons that there are many celebrities who choose to dine in this restaurant often. Few family customers also visit this restaurant during the weekends to experience one of the fine dining restaurants in London. Due to its locality, Marriott attracts worldwide celebrities who come to London for world premiers. The hotel is also frequented by sports personalities who have their after win celebrations.

CUSTOMER CARE POLICIES:

Marriott has many customer care policies which they are very keen on following to attract people from all corners.

Marriott has a very unique method of marketing and also takes utmost care in making the customer’s stay a pleasure hence increasing the chances for them to come back. In this Marriott, the personal information of the residents is stored in the database. This database is securely stored to prevent non-breaching. This database is shared by all the Marriott across the world. This enables them to send a greeting card or a gift for their customer on the occasion of birthdays and anniversaries no matter where they are in the world. Because of the inter relationships between the chains, this is achievable. According to surveys this method has been really beneficial in bringing back the customers, hence ensuring excellent customer care.

When it comes to corporate/business customers, Marriott follows mutual profit dealing. Marriott often maintains a relationship with regular customers from corporate companies. For a certain number of customers, Marriott provides discounts and additional services if the company for which the customer works has a tie up with Marriott. Under the package, even banqueting and board rooms can be provided for free based on the particular organisation. This includes accommodation in reduced price. The company ensures that the connection with the hotel is beneficial by using the services and hence increase the times of usage of the hotel. In the other hand, the hotel confirms a constant flow of customers. This can be considered as a profitable circle and hence it’s unique way of standing out from the crowd.

As mentioned before, Gordon Ramsay’s restaurant, The Maze, always has the capacity to attract people. People who want to taste the authentic French cuisine blended with Asian from the kitchen of a world famous chef always makes The Maze the centre of attraction. Due to the world premier of movies in theatres nearby, Marriott has seen an array of celebrities. And celebrities always attract crowd because of which Marriott increases its growth. Marriott ensures special attention, security and privacy for high profile people who need them the most. Privacy for these people is even provided in restaurants by providing special separate seating arrangements and hence keeping them away from the watchful eyes. These qualities make Marriot one of the most desired places to stay for the celebrities and hence ensuring a perfect service for different type of customers.

IMPORTANCE OF ESTABLISHING EFFECTIVE CUSTOMER CARE:

“A customer is an individual or group of individuals to whom you supply one or more products or services.” (Smith, 2004:6). “Customer care involves putting systems in place to maximise your customers’ satisfaction with your business. It should be a prime consideration for every business – your sales and profitability depends on keeping your customers happy.” (Business Link, 2010). The success of any business is hugely depended upon providing effective customer care.

Customer care is all about customer satisfaction. If an organisation can make an experience as a memorable moment, then there will be more return customers. Establishing effective customer care gives the organisation a high return and also the profit. Loyal customers are the one who are to be given extra care as they are worthy.

In this competitive world, the competition in the market is also very high. Customers are demanding for good service, good response to the complaints, and are demanding for extra bit of attention. Thus it is necessary for the organisation to prove a point to the customer that they really care for their customers.

The expectations of the customers have been constantly rising. To meet these expectations, the organisation must consistently analyse the level of service. If the requirement is not fulfilled by the organisation, then it will become a hurdle for the progression of the sector. Guests who are not satisfied will spread the news which will also create many obstacles to the business.

Effective customer care is important in order to get repeated guests and also the guest tends to refer their friends also. This improves the sales and also the profit of the organisation. The reputation and the image of the organisation are improved if the customer care is good. This in turn brings more shares in the market. Especially the internal customers i.e. the employees get more of job satisfaction by caring the customers.

The main goal of establishing effective customer care is satisfying or delighting the customers. It also helps to exchange more information, maintain a good relationship, trust and also to decrease the workloads and costs. In hospitality industry, customers are the king. Effective customer care will benefit the customers in many ways. It is one of the important parts of marketing mix. Quality in service will give more loyal guests. It also ensures that the services and products delivered to the customers will be of good quality. Thus, establishing effective customer care in hospitality industry is very much important for improving the growth of the organisation.

EVALUATING THE EFFECTIVENESS OF CUSTOMER SERVICE POLICIES:

The evaluation of the effectiveness of customer service policies is an important factor to increase the growth of any organisation. The evaluation shows how the policy implemented influences the organisation. Even though most policies are practically followed only after careful considerations, there are always chances for misleading factors which might give more cons then pros for the policy. A simple example can be the usage of man power for the different sections of a hotel. Using more people for work which takes more time to be done can be a simple and effective solution.

An effective customer service strategy has to be followed with considerable modifications based on the customer and their needs. Each customer is unique, so are their needs. In a customer service based roles, the colleagues will develop the capacity to differentiate the types of customers. If the situation permits, more importance can be given to customers with a higher value and who are more prone to be a regular customer. This just ensures that the specific customer goes through a different level of service hence providing equal service to all the customers.

Excellent customer service is achieved when the customer is provided with what he/she wants even before they use it. The needs of the customer and how these needs are to be met with are meant to be determined. Exceeding the customer’s expectation always frames a name for the organisation. These needs are to be met with great care and also with consideration for other factors like cost and profit. Creating a name in the market is one challenge and maintaining it for years is a more challenging feat. The colleagues should have a good knowledge about the service the hotel can provide and also the capacity with which it has to be provided.

Training for the employees should be focused and taken care of. The organisation must meet the needs of the employees and respect their decisions and ideas must be considered. Quality control is often achieved not by intensive supervision, but by building a sense of pride and the ability to work as a team. A proven method to increase the customer service skills of the employees is by sheer encouragement. This can be in any forms, as in increasing the bonus, the status in the organisation or even organising a special event. In a nut shell, happy employees provide excellent service, thus making the customers happy and make them come back again. This increases the profit and also the bonus for the employees, which makes them happy. This cycle is very crucial for any customer based organisation to stand out from the crowd.

Background and motivation:

The concept of service quality has been gaining importance since the 1970s; the basic concept behind premium service quality is delivering and meeting more than the expected from the customer. “Service quality is son intangible that objective measurement is impossible, it is largely believed that the main challenge lies mostly in managing appearances and perceptions (Harvey, 1998). Majority of the study in on service quality started during the 1970s and 19780s and the reason for this study gaining such rapid importance and becoming a matter of research and development is because of the attributes of complete intangibility associated with it. The four main attributes associated with measuring service quality and the views of a few major researchers and scholars in the related feel are as follows:

Intangibility: “Customers cannot evaluate a service prior to consumption, during consumption and cannot store the service after consumption” (Zeithaml, 1981; Shostack, 1984).

Heterogeneity: “Heterogeneity relates to the potential variability in the actual performance of services” and is supported by Booms and Bitner (1981) and Looy et al. (1998).

Perishability: The element of intangibility adds to the services being completely perishable that is the customer or consumer can neither save nor inventories it for consumption in the near future.

Inseparability: One of the key aspects associated with service is that the acts of production and consumption are simultaneous, this act is inseparable.

Service quality and business performance:

Although the performance of business is measured by more quantitative financial methods like profitability, market share, comparative growth rate, image of the business as perceived by the customers and the reoccurring business generated by consumer loyalty. These statically or financially calculated results definitely reflect a clear image of the health of the business, but factors like service quality have a deep impact on the performance of the business, as mentioned by Heskett et al. (1994) “Service quality is directly associated with customer satisfaction and customer loyalty”, and the factor that a satisfied customer would be a loyal customer and both these behaviours impact increase the profitability and growth of the business. “A satisfied customer will be loyal to the company and this loyalty is measured through customer retention which eventually is a measure for business performance”. (Jiju Antony Frenie Jiju Antony and Sid Ghosh, “Evaluating service quality in a UK hotel chain: a case study”; International Journal of Contemporary Hospitality Management Volume 16 · Number 6 · 2004; Emerald Group Publishing Limited).

Motivation:

Cases like the case of the Scandinavian Airlines System (SAS) are landmark examples of relationship between service quality and business performance, in this particular case the CEO of Scandinavian Airlines System (SAS) Jan Carlson in the early 1980s turned a $ 8 billion a year loss making business into a $ 71 million profit making business, he states he achieved this only by treating service quality as a key driver to achieve commercial success, this example reflects the impact delivering quality service can bring to the performance of an organisation.

With the exponentially growing importance of service quality arose the issues of having a system that would control and measure the quality of the service rendered and the flag areas of concern and commitment. Since the 1970s organisations have been using methods simple inspection which were then replaced by quality assurance and quality control organisations since the last decade organisations are adopting and implementing the culture of Total Quality Management (TQM) (Dale, 1999). Research results over the last decades very confidently claim that TQM has affected the financial performance of the firm in a very positive manner (Shetty (1993), Hendricks and Singhal (1997), Easton and Jarrell (1998), Handsfield et al. (1998), Samson and Terziovski (1999), Reed et al. (2000), Allen and Kilmann (2001) and Tena et al. (2001).

Organisations have been using TQM as a tool to measure service quality and it has been gaining importance and both in the areas of management theory and practice, this rapid expansion of the service industry and the importance of service quality in regards to business performance has really motivated me investigate in to service quality measurement and issues, the dynamics of TQM and evidential proof that over the years it has positively affected the financial performance of an organisation has directed me towards evaluating it as a service quality management tool, taking the hotel industry as an area of concern and development.

Research Problem and central research problem:

There has a been a lot of research and plenty of literature available on the implementation and the accountability of the Total Quality Management, but that mostly concerns with the manufacturing industry, which does not has fight the forces of intangibility and the product attributes associated with it. There is a very limited resource of literature and the implications that TQM would have in a completely service oriented industry. The developing literature on quality management includes: quality planning (Papic, 2007); quality assurance (Blackmur, 2004); quality auditing (Goodwin- Stewart and Kent, 2006), quality control (Tang et al, 2007); (Hoyle, 2007), and quality improvement (Maiga and Jacobs, 2005). Keeping in view the limited research and literature available in the area of service driven industry there are many questions and concerns regarding the success of quality management systems like TQM, hence it is a growing concern to investigate the implementation, factors involved in adapting to a TQM culture and most importantly the achieving the desired output, this has formed the basis of my research problem further leading me to the following research questions:

Is having quality in service a competitive advantage? And can TQM be the ideal tool to capitalise on this advantage?
How a service based business approach and adopts TQM in there area of business?
What are the critical factors that can enable the introduction of TQM culture in hotel operations?

These questions have been a concern among many in the service industry, specially the hospitality industry.

Significance of the research:

With the help of my research I feel I would be able to address the above mentioned questions and build a base which would act as a platform for further academic and professional research. With this paper I aim to establish the importance of quality and quality management for the service industry sector with focus on the hospitality industry, to better understand the implication I have further divided my researched and restricted it to the UK hotel industry as It is generally understood that these hotels benefit from improved quality levels and more experienced management (Hayes and Ninemeier, 2007; Stutts and Wortman, 2006).My research on TQM and the principles and significance of the different factors those are necessary to establish successful functionality of TQM culture within an organisation would definitely be significant.

Aims and Objectives:

The aim of this research is to explore and evaluate Total Quality Management system as a toll to measure and support the performance of the hospitality sector, with a specific interest in the UK hotel industry, the aim definitely reflects the importance of introducing TQM in the hospitality industry. Keeping in mind the aim, the research following objectives have developed:

Evaluate and analyse previous literature pertaining to quality and quality management.

Introducing Total Quality Management system to a service industry.

Exploring hospitality and hotel industry and applying TQM to the UK hotel industry.

Evaluate the critical success factors relating to the introduction of TQM through various case studies.

I believe these objectives would like milestones in my journey towards achieving the aim of my research eventually answering my central research question.

Structure of study:

In order to successfully convey my research hypothesis and make my research a platform for academicians and students for further research and development, I have divided my study on the topic into five different chapters, where with each chapter I intend to clarify and support my research question by means of facts, historic performance and realistic forecasts. The structure can be studied with help of the illustration below:

Chapter 1

Background, introduction, problem discussion and aim of the study

Chapter 6

Bibliography

Chapter 4

Methodology and Analysis

Secondary Data

Primary Data

Analysis

Chapter 5

Conclusion and recommendation

Chapter 2

Literature Review: Quality measurement in service industry

Chapter 3

Introduction to TQM, theory and models, TQM in the UK hotel Industry

Chapter 7

For any business to perform well, it must acquire and optimize the deployment of people with talent. Identifying the right talent to fill particular positions and roles is critical to an organization’s effective functioning. All, too often, though, businesses fail to devote sufficient attention to this issue. Organizations and jobs will never be the same eternally. Changes are based on the global economy, on changing technology, on our changing work force, on cultural and demographic changes, and on the changing nature of work itself.

We need to learn new skills and develop new abilities, to respond to these changes in our lives, our careers, and our organizations. HR planning is a decision making process that combines three important activities which are: identifying and acquiring the right number of people with the proper skills, motivating them to achieve high performance and creating interactive links between business objectives and people planning activities.

The purpose of this assignment is to document on the human resource planning at Shandrani Hotel as HR planning is based on the belief that people are an organization’s most important strategic resource. We will try to show how far theory can be put into practice as it is difficult to predict the future and also the policies and strategies within the organization can shift suddenly from one priority to the other. Moreover there is lack of evidence that Human Resource Planning really works as there has been little research evidence of increased use or of its success.

To assess future requirement of new staff both in terms of numbers and of levels of skills and competences, formulating and implementing plans to meet those requirements through proper recruitment and training.

Due to huge competition and globalisation around the world, managers have, to train and develop their employees to make them more efficient in the workplace. Human resource planning refers to the process of employing the right person for the right job. In all industry, organisation have now realised the importance of human resource planning, and all organisation may have different approach to HRP, however, this assignment lays focus in one particular sector, that is the tourism sector. Tourism sector which is labour intensive compared to other industries, for instance, sugar industry which is machine intensive. Therefore the application of human resource planning shall differ and be applied according to the need of the organisation.

Chapter 1 gives an idea about what is the position of tourism in Mauritius, we can therefore deduce from past figures that tourism industry is growing, thus very profitable for Mauritian economy

Chapter 2 defines the Human Resource planning since its year of introduction to its actual use in the market. We have compiled the views of various theorists on HRP.

Chapter 3 shows the procedures followed to gather information for the assignment, with particular reference to Shandrani Resort and Spa.

Chapter 4 gives an overview about Beachcomber group and presents Shandrani Resorts and Spa.

Chapter 5 will focus on the process of Human Resource Planning at Shandrani Resort and Spa.

CHAPTER 1: OVERVIEW OF TOURISM SECTOR IN MAURITIUS

The tourism sector, besides facing cut-throat competition knew an excellent performance for the first semester of 2010. Figures from the Central Statistical Office (CSO) of Mauritius has revealed that tourists’ arrivals for the period January-June 2010, has attained its 439,150 compared to 413,504 in the corresponding year of 2009, thus representing an increase of 6.2%. The tourism industry is of such paramount importance for the Mauritian economy, that the figures indicating the importance for the Mauritian economy towards GDP is expected to rise from 26.5% (MUR 77.8bn) to 32.4% (MUR216.4bn) in 2010.

The credits of the massive increases go to a combination of factors, such as aggressive advertising campaigns abroad, the opening up of air access to the country coupled with the increased capacity of airlines already serving the route and the greater consensus amongst all the industry stakeholders.

At the end of June 2010, there were 104 registered hotels in Mauritius, with a total room capacity of 11,362 and 23,168 bed places.

For the first semester of 2010, the room occupancy rate for all hotels averaged to 64% compared to 59% in the corresponding semester of 2009 while the bed occupancy rate was 56% against 52%.

Data from Bank of Mauritius indicates that gross tourism receipts for the first semester of 2010 were MUR 19,869m that is an increase of 8.5% compared to MUR18.249m for the same period of 2009. Based on data available on tourist arrivals for the first six months of the year 2010 and information gathered from various stakeholders, the Central Statistical Office (CSO) and the Mauritius Tourism Promotion Authority (MTPA) forecast of receiving nearly 1 million tourists this year, representing 5% year on year.

According to Bank of Mauritius, tourism receipts for this year will be around MUR 935 millions, representing an increase of 6.3% over last year figures.

Moreover, in order to tap the hospitality industry in Mauritius, major Indian hotel chains’ are aggressively setting up hotels in the country. According to Vijaye Haulder, Deputy Director, Mauritius Tourism Promotion Authority (MTPA), about 5 major hospitality chains in India are in talks with the Mauritian government for getting land to build hotels. All these hotels are expected to add about 1500 rooms in the next three-four years. The Sagar Hotel Group which is already running two luxury hotels in Mauritius is planning another hotel spread over 20 acres in the country.

The tourism industry is a colossal pillar for the Mauritian economy because we have a lot to give, sell and share with the world.

CHAPTER 2: LITERATURE REVIEW
2.0 Introducing HRP

Organizations are presently operating in a rapidly changing and competitive environment. Managers have to optimize the use of the available employees in order to be competitive. HRP therefore attempts to reconcile organisation’s needs for resources with available supply of labour.

HRP therefore results in matching people to the job, that is, the right people doing the right thing. HRP needs to be adjusted from time to time because the goals and objectives of an organization are not stable due to various uncertainties.

2.1 Defining HRP

Walker (1980) defines it as “aˆ¦a management process of analyzing an organisation’s human resource needs under changing conditions and developing the activities necessary to satisfy these needs.” Similarly, Vetter (1967), Burrack and Mathys (1985) define it as a process aimed at assisting management to determine how the organization should move from its current staffing position to its desired position.

Nel et al (2008:216) maintains that HR planning “ensures that a predetermined amount of employees with appropriate skills, knowledge and abilities are available at a specified time in the future aˆ¦ Hr planning therefore systematically identifies what is needed to be able to guarantee their availability.”

As defined by Bulla and Scott (1994), it is “the process for ensuring that the human resource requirements of an organization are identified and plans are made for satisfying those requirements.”

From the definitions of Human Resource planning proposed by the various researchers and practitioners, it is possible to attempt to define what HRP is in today’s circumstances. It is in our terms a management process designed to translate strategic objectives into targeted quantitative and qualitative skill requirements, to identify the human resource strategies and objectives necessary to fulfill these requirements over both the shorter and the longer terms,

As Quinn Mills indicates, human resource planning is “a decision-making process that combines three important activities:

1) Identifying and acquiring the right number of people with the proper skills,

2) Motivating them to achieve high performance, and

3) Creating interactive links between business objectives and people-planning activities.”

However, it must be recognized that although the notion of human resource planning is well established in the HRM vocabulary it does not seem to be established as a key HR activity.

As Rothwell (1995) suggests: ‘Apart from isolated examples, there has been little research evidence of increased use or of its success.’ She explains the gap between theory and practice as arising from:

The impact of change and the difficulty of predicting the future – ‘the need for planning may be the inverse proportion of its feasibility’;

The ‘shifting kaleidoscope’ of policy priorities and strategies within organizations;

The distrust displayed by many managers of theory or planning- they often prefer pragmatic adaptation to conceptualization;

The lack of evidence that human resource planning really works.and to provide necessary feedback mechanism to assess progress. Overall the purpose of the planning is to invoke an institutional learning process and to generate information which can be utilized to support management decision-making in all staffing areas.

2.2 The process of Human Resource Planning (HRP)

Organizations engage in the process of HRP to identify HR needs and the ways of meeting those needs.

Business strategic plan; Defining future activity levels and initiatives demanding new skills.

Resourcing strategy; Contributes to the formulation and implementation of business strategies. It refers to planning in order to achieve competitive advantage by developing intellectual capital – employing more people than rivals; these people will have a wider and deeper range of skills and behave in ways that maximize their contribution-The organisation attracts such people by being an ’employer of choice’.

Scenario planning; assessing in broad terms where the organisation is going in its environment and the implications for human resource requirement. Scenario planning has been fairly described “as a formal process but it can also be regarded as an informal approach to thinking about the future in broad terms, based upon an analysis of likely changes in the external and internal environment.”(Armstrong 2001)

The next stage in the process involves predicting how the need for and the availability of Human resource is likely to change in the future.

Demand forecasting; estimating the future quantity and quality of people required. The ideal basis of the forecast is an annual budget and longer term business plan, translated into activity levels for each function and department or decisions on downsizing.

Various demand forecasting methods are available and they will be analyzed below:

managerial or expert judgment

This is the most common method and it simply requires management to sit down and estimate the human resources necessary to achieve corporate goals.

ratio-trend analysis

It is carried out by identifying past trends, using statistical and mathematical techniques and project these into the future to determine requirements.

work-study techniques

This is effective when individual components of jobs can be measured. This job is broken down into discrete tasks, measure the time taken to complete each component and calculating the amount of labour required.

modeling

Mathematical modeling techniques using computers help to prepare demand forecast.

Supply forecasting; measuring the number of people likely to be available from within and outside the organization having allowed for absenteeism, internal movements, and promotions among others.

The forecast will be based on:

1) An analysis of the existing human resources in terms of skills, occupations

2) Forecast losses to existing resources through attrition/labour wastage.

3) Forecast changes to existing resources through internal promotions

4) Effects of changing condition of work and absenteeism

5) Source of supply from within the organization

6) Source of supply from outside the organization in national and local labour market

Analysing internal human resources

The review of current resources needs to cut organizational and occupational boundaries to provide inventories of skills and potential. It may be important

1) To know how many people with potential promotion exist and where they can be found

2) To know how many people have special skills and abilities in the organization

3) To identify the problems that may arise from retirement

In fact the above can help to ensure that the organization is making the most efficient use of its existing resources and can help to identify any potential problem areas.

Analysing external supply

External supply of potential employees needs to be indentifies- some factors which can have important impacts on the supply of manpower at local and national market are:

Population densities within reach of company

The attractiveness of the company as a place to work in

The effect of changing educational patterns, students staying longer in schools

Analysing demand and supply forecasts

The demand and supply forecast can then be analyzed to determine whether there are any deficits or surpluses in human resource. This provides the basis for recruitment, retention and if unavoidable, downsizing plans.

It refers to the analysis of the number of people leaving the organisation. It provides data for use in supply forecasting, so that calculations can be made on the number of people lost who may have to be replaced.

Moreover, an analysis of the number of leavers and the reasons behind their leaving the company will indicate whether actions are needed to improve retention rates. The most common method of measuring labour turnover is expressed as follows:

Number of leavers in a specific period x 100
Average number of employees during same period

This measure is used most effectively on a comparative basis and frequently provides the basis for internal and external benchmarking.

Investigations into reasons for turnover are undertaken via exit interviews and leaver questionnaires or even through attitude surveys.

Reasons for leaving are:

More pay

Better career prospects

More security

Poor relationships with manager or team leader

Bullying, harassment

Labour turnover can be very costly since it represents an opportunity cost of time spent by HR and Line Manager in recruitment, loss arising from reduce input from new starters until they are fully-trained, direct costs of introducing induction course.

Work-environment analysis

It refers to the analysis of the environment in which the people work in terms of scope it provides for them to use and develop their skills and achieve satisfaction.

Operational effectiveness analysis

Analysing productivity, the utilisation of people and the scope for increasing flexibility to respond to new and changing demand.

Human Resource Plans

The HR plans are derived from the resourcing strategy and takes into account data from a combination of scenario planning, demand and supply and forecasting and labour turnover analysis. Again there is a lack of certainty and predictability.

“The plans often have to be short term and flexible because of the difficulty of making firm predictions about HR requirement in times of rapid change.” (Armstrong 2001: 375)

Plans need to be prepared in the areas of resourcing, flexibility, retention, downsizing and productivity

Resource planning

This is primarily concerned with preparing plans for finding people from within the organisation, recruiting externally and attracting high quality candidates as the “employer choice”

Internal resourcing is the first step to analyse the availability of suitable people from within the organisation, by referring t assessments of potential and a skill database- decisions can be made to promote, redeploy and provide extra training to eligible staffs.

The recruitment plan would include the number and type of employees required to make up any deficits and when they are needed. The likely sources of recruits are colleges, advertising.

Plan for trapping alternative sources such as part timers

How recruitment programme will be conducted

Employer of choice plan

Recruitment plans should include plan for attracting good candidates by ensuring that the organization will become an employer of choice. Initiatives to become an ’employer of choice’ might include

Providing opportunities for development and career progression

Addressing work life balance issue

Better remuneration packages

Retention Plan

Man Fred De Vries (cited in Williams 2000:28) stated that ‘today’s high performers are like frogs in a wheelbarrow: they can jump anytime”

Various organizations recognize this and are turning their attention to key staff. Retention measures can include the following:

Pay and benefit – competitive rates of pay, flexible benefits

Recruitment and selection – set appropriate standards, match people to posts, provide an accurate picture of the job

Training and development – good induction processes, provision of development opportunities to meet the needs of the individual and the organizations.

Job design, provision of interesting work as much autonomy and ream working as possible.

Management ensures that managers and supervisors have the skills to manage efficiently.

Flexibility Plan

Planning for increased flexibility in the use of Human Resource to enable the organization to make the best of its people and adapt swiftly to changing circumstances.

Armstrong suggests that the aim of the flexibility plan should be to

Provide for greater operational flexibility

Improve the utilization of employees skills and capabilities

Reduce employment costs

Help to achieve downsizing smoothly and avoid the need for compulsory redundancies

Increase productivity

Thus strategies like job sharing, home working, tele working, subcontracting and employing part time workers should be implemented.

Productivity Plan

It sets out programmes for improving productivity and reducing employment costs in such areas as:

Improving methods, systems and processes

Mechanization, automation and computerization

The use of financial and non financial incentives

Downsizing plan

The downsizing plan is implemented as last resort ‘if all else fails’ It may be necessary to deal with unacceptable employment costs/surplus number of employees by downsizing. The downsizing plan should be based on timing of reductions and the process itself.

The plan should set out the following:

The number of people who have to go and when and where this need to take place

A forecast of the likely numbers who will be volunteer to leave

Arrangement for informing and consulting with employees and their trade unions

2.3 Aims of HRP

Planning of human resource is extremely important as it enables the optimum use of the most valuable asset of an organization in the attainment of its objectives and goals.

To find gaps and devise solutions. As we say, nobody plans to fail; they just fail to plan.

To attract and retain the number of people with the appropriate skills, expertise and competencies

To anticipate the problems of potential surplus and deficits of people

To develop a well trained and flexible workforce, thus contributing to the organization’s ability to adapt to an uncertain and changing environment

To reduce dependence on external recruitment when key skills are in short supply by formulating retention as well as employee development strategies.

2.4 Factors affecting HRP
Employment

HRP is affected by the employment situation in the country i.e. in countries where there is greater unemployment; there may be more pressure on the company, from government to appoint more people. Similarly some company may force shortage of skilled labour and they may have to appoint people from other countries.

Technical changes in the society

Technology changes at a very fast speed and new people having the required knowledge are required for the company. In some cases, company may retain existing employees and teach them the new technology and in some cases, the company has to remove existing people and appoint new.

Organizational changes

Changes take place within the organization from time to time i.e. the company diversify into new products or close down business in some areas etc. in such cases the HRP process i.e. appointing or removing people will change according to situation.

Demographic changes

Demographic changes refer to things referring to age, population, composition of work force etc. A number of people retire every year. A new batch of graduates with specialization turns out every year. This can change the appointment or the removal in the company.

Shortage of skill due to labour turnover

Industries having high labour turnover rate, the HRP will change constantly i.e. many new appointments will take place. This also affects the way HRP is implemented.

Multicultural workforce

Workers from different countries travel to other countries in search of job. When a company plans its HRP it needs to take into account this factor also.

Pressure groups

Company has to keep in mind certain pleasure. Groups like human rights activist, woman activist, media etc. as they are very capable for creating problems for the company, when issues concerning these groups arise, appointment or

2.5 Human resource activities

Human Resource (HR) planning is imperative to an organization’s success. It serves as an analysis of the current and future needs of the organization. This process helps guide an organization in several areas, such as staffing, development, training, and benefits and compensation designs.

Staffing

Staff, or personnel, planning is one of the most common activities conducted by HR departments, according to an article on AllBusiness.com. It typically is comprised of using the current staff size and design to predict staffing levels for the upcoming year. HR departments may utilize a company’s strategic plan as a resource for information. For example, if an organization intends to launch a new interactive website in the following year, the HR department will budget for additional staff to build and maintain the website.

Training and Development

HR departments create training and employee development plans as well. This type of planning must be conducted in advance of the company’s needs in order to prepare for them, both from financial and resource perspectives. Training for new employees and product rollouts may be included. Teaching current employees new skills is considered an aspect of development. Organizations benefit from having streamlined and consistent training programs

Career Development

Career development is imperative in order to prepare an organization for upcoming retirements, as well as to retain long-term employees. Companies need to have a strategic plan on how they intend to replace their management with qualified leaders. This means that current employees should have career road maps and plans that incorporate both short-term and long-term goals. For example, if an organization is grooming a top, young salesperson for the management track in five years, training should begin now. This may include time management courses, classes on how to coach others and a mentor program.

Downsizings

When companies foresee an upcoming need to downsize, it’s in their best interest to have their HR departments plan for it in advance to ensure that the process is smooth and orderly, and complies with all legal requirements. This type of planning also may prevent loss of knowledge and resources. Some companies begin the downsizing process by eliminating non-essential personnel. Others lay off administrative staff, but keep money-generating positions. Organizations may be hit by lawsuits and high unemployment costs if downsizing is not strategically planned.

2.6 Advantages and disadvantages of HRP

HRP, in both its traditional and more contemporary forms, can be perceived to have a number of distinct advantages. Firstly, it is argued that planning can help to reduce uncertainty as long as plans are adaptable. Although unpredictable events do occur, the majority of organizational change does not happen overnight so the planning process can provide an element of control, even if it is relatively short term.

Taylor (2002 : 73-74) suggests that in the HR field there is potentially more scope for change and adaptation in six months than there is in relation to capital investment in new plant and machinery. Thus he argues that many of the assumptions about the difficulties of planning generally are less relevant to HR.

Other advantages relate to the contribution of planning to organizational performance, for ex, the planning process can make a significant contribution to the integration of HR policies and practices with each other and with the business strategy, i.e. horizontal and vertical integration.

Marchington and Wilkinson (2002: 280) suggest that HR plans can be developed to ‘fit’ with strategic goals or they can contribute to the development of the business strategy, but conclude that ‘either way, HRP is perceived as a major facilitator of competitive advantage’.

Another way that HRP can contribute is by helping to build flexibility into the organization, either through the use of more flexible forms of work or through identification of the skills and qualities required in employees.

IRS (2002c) report that a number of organizations have predicted that jobs are likely to change radically over the next few years and so are using selection techniques to assess core values rather than job-specific skills.

2.7 Difficulties in implementing HRP

Planners face significant barriers while formulating a Human Resource Planning. The major ones are the following:

People question the importance of making human resource practices future oriented and the role assigned to the practitioners in formulation of the organisational strategies. Their argument is simple- there are people when needed offer attractive package of benefits to quit when you find them in surplus.

HR practitioners are perceived as experts in handling personnel matter, but are not experts in managing business. The personnel plan conceived and formulated by the HR practitioners when enmeshed with organisational plan, might make the overall strategic plan itself defective.

HR information often is incompatible with the information used in strategy formulation. Strategic planning efforts have long been oriented towards financial forecasting often to the exclusion of other types of information.

Conflicting may exist between short-term and long-term HR needs. For example, there arises a conflict between the pressure of getting work done on time and the long term needs, such as preparing people assuming greater responsibilities. Many mangers are of the belief that HR needs can be met immediately because skills are available on the market as long as wages and salaries are competitive. These managers fail to recognise that by resorting to hiring or promoting depending on short term needs alone, long term issues are neglected.

There is conflict between quantitative and qualitative approach to HRP. Some people view HRP as a number game designed to track flow of people across the departments. These people are strictly quantitative approach to planning. Others take a qualitative approach and focus on individual employee concerns such as promotability and career development. Best results are accrued if there is a balance between the qualitative and quantitative approaches.

Non involvement of operating managers renders HRP ineffective. HRP is not strictly an HR department function. Successful planning needs a coordinated effort on the part of operating managers and HR personnel.

CHAPTER 3: RESEARCH AND METHODOLOGY

This chapter examines the methodology used to carry out the research survey so as to collect data for the topic under consideration that is ”the process of Human Resource Planning with particular reference to Shandrani Resorts and Spa, member of the Beachcomber Hotels. It involves the examination of the whole research process from beginning to end.

3.1 Problem definition

”A problem well defined is half-solved.”Kotter.

Human resource planning is assumed to consist of 4 clear steps: 1)forecasting future needs, 2)analyzing the availability and supply of labour, 3)drawing up plans to meet supply to demand, 4) monitoring the implementation of the plan.

The main issue of this assignment is to analyse the process of human resource planning and the focus of the research is on the hotel industry.

3.2 Research objectives

The survey was most specifically carried out at Shandrani Resort and Spa and its objective is

To assess future people requirements both in terms of numbers and level of skills and competences, formulating and implementing plans to meet those requirements in terms of recruitment and training.

3.3 Research design

For the purpose of this assignment, the most appropriate strategies used were exploratory and descriptive as the research is analysing the process of HRP.

On a first instance, an exploratory research was made to reach a better understanding of the research of the research problem. It took the form of an in-depth interview with professionals working at Shandrani, and for the Beachcomber hotels as well. The in-depth interview took the form of a question list with open-ended questions.

3.4 Data collection methods
Secondary data

Secondary data were collected from books, journals, articles, and appropriate websites. Information about the hotel has been collected from Shandrani Resorts and Spa documents, namely the Beachcomber group manual and Shandrani’s Livret D’accueil.

Primary data

An interview was carried out with top management to gather primary data. A questionnaire was therefore designed for this purpose. (See Appendix)

Other primary researches

Interview with the Director of Shandrani .

Face to face interview with Director of Human Resource.

Interview with Director of Beachcomber Training Academy for 3 hours.

Interview with the Quality assurance manager.

Int

In Dubai, the Jumeirah group’s present portfolio includes many multi-hotel complexes such as Jumeirah Bab Al Shams Desert Resort & Spa, Mandinat Jumeirah, Jumeirah Beach Club Resort & Spa, Jumeirah Emirates Towers and the Jumeirah Beach Hotel. At the same time, it is also negotiating to operate new resorts and hotel contracts in big cities like Shanghai, Hong Kong, Milan and Beijing. The company is operating in order to achieve its vision that “to become a world class international hospitality and hotel company and also committed to being the leader of the industry in all operating activities through the process of dedication to their colleagues and customers (About Jumeirah Group).

The Jumeirah group also has been a member of Dubai Holding since the duration of year 2004 under the leadership of CEO Gerald Lawless. The company’s achievement can be estimated by the data that in the year of 2006, the revenues were recorded more than $1 billion (About Jumeirah Group).

The project would help us to analysis a company’s resources and its competitive position in the world. This will aim to get deep understanding of its current strategy and to create a strategy which would be more effective as per the current scenario. This would be helpful to gain insights about the flaws and their solutions of the company as per the current scenario and current strategy. The study would analysis strength, weakness, opportunities and threats and eventually the proposed alternative can be adopted to enhance the current situation of the company.

Company Background:

The Jumeirah group was founded in Dubai in the year of 1997, owned by ruling Al Maktoum family with the Gerald Lawless, with an aim of becoming a global hospitality leader. After ten years of development the company has been realized with the group’s portfolio that has been regarded as among the most innovative and luxurious globally (Corporate Responsibility Report 2008). The brand of the Jumeirah group can be summarized as

A global brand having name synonyms of Luxury.

A brand having professional team of experts and professionals having wide experience in entire aspects of hotel management that handles the functions from development phase to the daily operations.

A strong distribution system with the help of more than ten sales offices in major locations of the world.

A strong emphasis on an adapting approach to the owner (Corporate Responsibility Report 2008).

The Jumeirah branched from the strength of Dubai’s ruling Maktoum family in order to develop the UAE member into one of the regions as well as in the world’s top tourism destinations. In the early period of the year 1990s, Sheikh Mohammed al Maktoum commissioned a new project for the hotel which was supposed to build on land that reclaimed from the sea in the Dubai port, called the Burj Al Arab (Corporate Responsibility Report 2008). However the first three year of the project were held in the land reclamation phase that lead to the launched of the construction by the year 1997. At the same time, Al Maktoum joined with the Gerald Lawless who was an Irish native had more than twenty year of work experience in the hotel industry and had fifteen year of experience as a head of the Forte hotel group in Dubai only. After join with the Lawless, Al Maktoum had begun to start others hotel projects for the wide market of Dubai such as Jumeirah Beach Hotel. In addition to the hotels and restaurants, Maktoum developed Water Park and theme park also (Corporate Responsibility Report 2008).

Hallmarks:

The company’s vision is to become a world class luxury international hotel management company that committed to the industry leader in all the operational activities through the medium of the dedication to colleagues, customers, stake holders, owners and business partners (Jumeirah Guiding Principles & Vision).

The company’s Hallmarks considered as the reason of their success in the past as well as guidelines for the future. The Hallmarks are seems to reflects in design of inspiration and would remain in the core of operating philosophy along with the new adopted philosophy of “Stay Different’. In Jumeirah culture their guiding principles plays a major role which are supposed to be consider as foundation of the business and strength of their culture (Jumeirah Guiding Principles & Vision). They are:

Integrity :Honesty and Sincerity

Teamwork: win-win attitude and mutual support

Recognition: Success are supported and recognized

Innovation: Implementation of new idea’s

Continuous Growth: Positive Environment

People Focus: Focus on individual as colleagues, business associates and customers.

Stay Different : provides unique experience to the customers (Jumeirah Guiding Principles & Vision)

Strategic Objective:

The Jumeirah group strategic objective is to fulfill their vision and mission through the commitment of resources to learning and innovation. Through the Business Management System the company is delivering benefits to the business partners, customers, colleagues, society and owners by developing mutually beneficial relationships, listening and building loyalty. In order to fulfill the company’s vision, the Jumeirah strategic approach is summarized in the four key components. They are

Engaging stake holders in order to understand their expectations so that they can be fulfilled or expanded and value can be added.

Managing key factors of the social, environmental and economical aspects like their risk, opportunity and their impacts.

Embedding responsible business practices and standards in the business daily operations and activities.

Reporting back to the stakeholder about the progress and development of the company.

With the implementation of the above four key strategies the company is trying to be expanding and delivering services all over the world. The company is focusing on current strategy in order to fulfill their objective. The company’s current strategies inclusive of global expansion, Stay different, provide unique and different services, value to stake holders, provide luxury and comfort to the customers and implementing the process of learning and innovation (Jumeirah Guiding Principles & Vision).

Project Undertaken/ Completed:

The following are the list of projects which are undertaken or completed under the Jumeirah group are:

S. no

Name

Specification

Location

Burj Al Arab

Hotel

Dubai (Middle East)

Jumeirah Beach Hotel

Hotel

Dubai (Middle East)

Madinath Jumeirah

Three Hotels

Dubai (Middle East)

Jumeirah Zabeel Saray

Hotel & buzzing bazaar

Dubai (Middle East)

Jumeirah Creekside Hotel

Hotel(opening summer in 2012)

Dubai (Middle East)

Jumeirah Emirates Towers

Hotel, Spa, Shopping boulevard, Club and Lounge

Dubai (Middle East)

Jumeirah Living World Trade

Centre Residence

Residence

Dubai (Middle East)

Jumeirah at Etihad Towers

Hotel

Abu Dhabi (Middle East)

Jumeirah Messilah Beach

Hotel & Spa (opening spring 2012)

Kuwait (Middle East)

Jumeirah Essex House

Residence

New York (America)

Jumeirah Carlton Tower

Spa, Club, Hotel & Resort

London( Europe)

Jumeirah Lowndes Hotel

Hotel

London( Europe)

Jumeirah Frankfurt

Residence

Germany (Europe)

Jumeirah Port Soller

Hotel and Spa (opening spring 2012

Mallorca

Jumeirah Bilgah Beach Hotel

Hotel (opening spring 2012)

Europe

Grosvenor House Apartments

Residence

London

Jumeirah Grand Hotel Via Veneto

Hotel

Rome

Jumeirah Himalayas Hotel

Hotel

Shangai (Asia pacific)

Jumeirah Dhevanafushi

Island Resort

Maldives(Asia pacific)

Jumeirah Vittavel

Five star family deluxe resort

Maldives(Asia pacific)

Wild Wadi waterpark

Waterpark

Dubai (Middle East)

Talisa

Spa

Middle East

Academy of Excellence

Education

Dubai( Middle East)

(Jumeirah Hotels & Resorts)

Analyzing Current Scenario of Hospitality Industry in the UAE:

During the past decade, the UAE has witnessed with the rapid growth and changes in terms of socio-economic and demographic factors. The regions economy are not perceived as oil and gas exporter but also as major investment destinations due to growing hospitality and tourism sector as well as large scale infrastructure projects. At the same time, the expansion of the Middle East is greatly contributing in the tourism receipt in the Gulf Council Corporation countries. In current situation, the region remains an attractive destination for tourists as well as for the investors for medium to long term returns. The Jumeriah group has provided tremendous growth in the hospitality sector in Dubai and globally also.

The study aims to evaluate a company’s resources and its competitive position in the world. This analysis will be undertaken by the following described process:

Value Chain Analysis

Michael Porter’s five force Model

SWOT Analysis

Benchmarking

Competitive Strength Assessment

After analyzing on the above aspects, we will be able to determine competitive position in the world as well as would be able to create a strategy in terms of its position.

Value Chain Analysis:

The value chain approach was developed for creating and sustaining superior performance in the market. The value added concept is utilized by Jumeirah Group for sustaining competitive advantage in the arena of 21st century. The organization comprises of activities that associate together in order to enhance business value. These activities include inbound logistics, operations such as purchasing, manufacturing, financing, distribution etc. The central aim of Jumeirah Group to adopt this value chain approach is exploiting value creation with minimum possible costs (Jumeirah Group, 2008).

http://bettyfeng.files.wordpress.com/2009/08/a-value-chain-analysis1.jpg

Source: http://bettyfeng.files.wordpress.com/2009/08/a-value-chain-analysis1.jpg

By adopting the concept of value chain analysis, Jumeirah managers identify the key activities within their group and provide potential sustainable advantages to the company.

In Jumeirah Company, the value chain analysis starts with the initial stage such as inbound logistics. At this stage, planning is performed for plant scheduling, plant capacity, estimate time for fulfilling objectives. After this stage the next step is operations under which company emphasized on the quality of services, customer’s expectations, fulfilling orders and customer visit operations. The main theme of Jumeirah Group is to enhance and implement their core services in such a way so that can meet the customer’s expectations and create positive and sustainable brand image in their eyes. The company more emphasized on the development of innovative programs, current strategies and their Research and Development programs in order to support business by facilitating new openings and high quality services to their customers (Jumeirah Group, 2008).

Jumeirah Group incorporates value chain for synchronizing the flow of business operations from input to the delivery of benefits given to the customers. This flow comprises of inbound logistics, operations, outbound logistics, marketing and sales operations and at the end gets feed back from customers and resolve problems if there is any (Jumeirah Group, 2008).

Benchmarking:

Benchmarking is the process of analyzing the internal processes of organization and then identify and adapting the practices from other organization in order to considered being best for the organization. This process comprises of five stages such as operation, identification of assess, development of several alternatives, define that alternatives and at the end implementation of that alternatives. Benchmarking is the systematic tool for identifying and implementing best possible practices in the organization so that it can enhance their operations and human assets as per the today’s need. In this competitive arena for sustaining in market, it is mandatory to implement benchmarking in the organization (Jumeirah Group, 2008).

http://pipdev.com/content/images/wheel/RouteDiag.png

Source: http://pipdev.com/content/images/wheel/RouteDiag.png

Jumeirah Group has been designed this exercise for enlighten participation of organization in order to achieve outstanding results. Jumeirah Group and other organizations such as Dubai Ports World, Hutchison Whampoa Ltd, are aimed to explore best methods and practices for enhancing Human Resource Management in the view of planning, empowering, training and recognizing human efforts. It is also aimed to identify the gaps between the adopted approaches and the enhancement of improvement plans so that can analyze the effects of adopted approach in the organization. This approach develops new ideas that acts significant role in the formation of future strategic plans (Jumeirah Group, 2008).

Five Force Model and Analysis:

The Michael Porter’s five force Model articulates the Competitive position modal which describes the industry analysis and business strategy development for evaluating the competitive strength and position of any business organization or Entity. This model used to analyze the market attractiveness of the industry and competition. Porters develop the five force model to analyze to these five forces to analyze the industrial competition (porter’s five forces model, 2009).

Five force model of Porters-

http://lh3.ggpht.com/_9wN0HRTUtkk/SlYIITyreTI/AAAAAAAAAEM/4ZdtR5H9I9o/porter%20five%20forces%20model.jpg

Threat of new competition.

Threat of substitute products or services.

Bargaining power of customers (buyers).

Bargaining power of suppliers.

Intensity of competitive rivalry.

Threat of new competition:

This step articulates the competition in the market, new entrants, brand equity, sunk cost, customer loyalty and industrial profitability in the market for the existing industry which can be challenging for the firm. Barriers to new entry-

Customer switching cost

Distribution channel

Government Policies

Economies of scales.

2. Threat of substitute products or services-

Entry of substitute product in the market may increase the possibilities to the switching towards the new product it can be challenging for the existing product. Barriers of the substitute product or services-

Substitute product price and performance over the existing product.

Switching cost of buyer.

Quality depreciation

Product differentiation.

3. Bargaining power of buyers:

Bargaining power of the buyer may be challenging factor for the existing industry or firm such as-

Purchasing power of the buyer.

Byers face new switching costs.

Prices sensitivity of buyer.

Buyers are concentrated

Industrial product diversity.

4. Bargaining power of suppliers:

Suppliers for any particular firm like supplies of raw material, components and labors can switch the firms due to the bargaining power scubas-

Buyers is not the customer to the.

Distribution channels.

Supplier concentration

Supplier switching cost.

Supplier completion to the other firms.

Intensity of competitive rivalry-

Competitive rivalry can be the challenging factor for the existing firm some factors are-

Different competitive strategies

Promotional tools

Competitive advantage to the other industries.

From the Porters five force model we analyze the Jumeirah group world class portfolio of resorts and hotels (Corporate Responsibility Report 2008).

Threat of new competition- As we analyze the competitors of the Jumeirah Group these are the competitors of the Jumeirah Group-

Hyatt Hotels Corporation

Fairmont Raffles Hotels International Inc.

Four seasons Holdings Inc.

Jumeirah Group has the partnership with the UAE government, Dubai Department of Tourism and Commerce Marketing (DTCM) in association with Tanmia (The National Human

Resource Development and Employment Authority

2) Threat of substitute products or services-

Jumeirah Group has a strong product and services portfolio in the luxury hospitality sector including world class hotels and resorts.

In the hotels and resorts category the products of Jumeirah-

Burj Al Arab

Jumeirah Beach Hotels

Jumeirah emirates tower

Jumeirah Zabeel Sara.y

Pera palace Hotel.

In the services sectors-

Includes of services of Jumeirah Living

Jumeirah Restaurants,

Wild Wadi Waterpark,

Talise and The Emirates Academy of Hospitality management.

Jumeirah group is offering the best services and performance over its competitors. They have brand loyalty and offering the qualitative services to its customers and Jumeirah group have different product strategies to compete with the competitors

3) Bargaining power of customers (buyers)-

Jumeirah group’s customers can be classified on the bases of several categories- hotel guest, clients, bulk room purchaser, customer’s book room for events and conferences and partner such as tour operators and airlines.

Jumeirah Group has strong commitment towards its customer. Customer value feedback for the Jumeirah group is-

Personalized products and services delivering high quality.

Favorable impact on the community.

Group offers the customer health, safety and security services.

Customer privacy and information security service.

Customer satisfaction result of the Jumeirah group is for the year 2008 is 81.265 which show the customer loyalty to the group over its competitors.

4) Bargaining power of suppliers-

As we analyze the supplier chain of the Jumeirah group has strong corporate buying policies with its supplier’s provision of high quality and good products and services. The Group follows the principles-

Stability in the dealings with the suppliers

Provide equal and same opportunities to the all suppliers

Consistent delivery of services such as health, safety and legal aspects.

Transparency in the system.

Best distribution channels such as advertising for its services offering.

Intensity of competitive rivalry-

Jumeirah Group has the different competitive strategies over its competitors.

They promote their products and services by different promotional tools such as by advertising, Sales promotion and by the different occasion.

SWOT Analysis:

Dubai is the fast emerging player in the worldwide along with the China and South East Asia. Dubai attracts the attention of business and corporations across the world through its infrastructural art and cosmopolitan culture. Along with the real estates and financial sectors, petroleum and tourism, it is also known for its exotic resort and hotels. Jumeirah Group is the main player in the hotel and resort industry (Jumeirah Group, 2008). This group has certain strengths, weaknesses, opportunities and threats which are as follows:

Strength:

The art of infrastructure with the surplus of international convention centers added value to the Jumeirah Group.

The cosmopolitan culture in UAE gives rise to the Jumeirah Group in the hotel industry which becomes strength of this group.

Crime rates are low in UAE as compared to the other nations which facilitate economic support and social support to the company.

Middle East is the epicenter of trade that comprises of various standard businesses and corporations which gives hike to the hotel and resort industry.

In Dubai, government has pro- active authorities that give aid to the company in order to control situations rather than just responding to it.

Jumeirah Group has been linked with other nations in the world wide.

Special travelling packages are the additional advantages to t he company. It offers several packages according to each living standard so that easily can be reach.

Jumeirah Group is strategically placed in Dubai, which is situated between Asia and Europe while it is also closure to the Africa so there is probability that several tourists can rushed here which motivates hotel industry.

This group works for the enhancement of their human resource by adopting various techniques in order to update their strategies and tools with the recent time.

The Jumeirah Group diversified itself into various sectors such as academics, water parks, spa, residents etc which strengthen the company (Jumeirah Group, 2008).

Weakness:

In the year of 2010, Dubai is considered as the expensive city that lies at fifty five positions in the list of most costly cities. These days it is becoming extremely expensive in the terms of travelling, hospitality, hotels etc. which may affects the economy as well as businesses.

In the recent time Dubai has undergone in the bubble crash of real estates because of the reason that there was a sudden drop in the investment being made in the sector and due to the lack of investments the real estate sector crashed. It affected economy and still it is on recovery mode.

In the Middle East, the rate of crime is low in spite of that it had been noticed that there is an increase in sex and drug crimes and which got huge media publicity which influence the hotel industry.

In Jumeirah Group, employees are working belongs to various nations that have there own culture sometimes this differences in culture affects the working of company (Jumeirah Group, 2008).

Opportunities:

Prospective economic development opportunities due to increase in prices of oil, this economic development leads to contribute remarkable benefits to the hospitality business.

Further growth prospects in the tourism industry of UAE with 15 million foreign tourist visitors expected up to the year 2015 proves to be very helpful in the tourism business of Jumeirah group.

Dubai is considered as the business and tourism hub of UAE and Middle East, it has high business growth prospects including geo political opportunities from the west and emerging authority from the east and ultimately helpful in providing good business opportunities to the Jumeriah group.

Initiatives taken by UAE government towards the development of hospitality sector provides ample amount of opportunities to the Jumeirah group.

Unique experience offer by the Jumeriah group in the form of ethnic heritage services pertaining to the hospitality leads to enhance the number of potential customers.

UAE is the business hub of Middle East and hence various business tourists are prospective customers for the Jumeriah group.

Various promotional schemes provided to the customers helps in the boosting of business of Jumeriah hotels.

Enhanced brand image and brand equity for the augmented quality service deliverance to the customers helps in the further growth and expansion of the business of Jumeriah group.

Jumeriah group provides a wide variety of cuisines including the Arab cuisines, Indo Thai, Chinese, Italian, Mughlai cuisines etc. to its customers which helps in increasing the profitability of the group.

The augmented exteriors and interiors of the hotel in comparison to the competitors delight the customers and attract them to take the services of Jumeriah group again and again.

Delivering the world class hospitality services at the affordable rate helps in increasing the number of local as well as foreign customers of the Jumeriah group (Jumeirah Group, 2008).

Threats:

The development of the various other cost effective and stirring competitive locations like Muscat, Kuwait City and Doha puts major barriers in the development of Jumeirah Group.

Prague and Istanbul are the cities which offer effective cultural tourism along with the fabulous contemporary services at the best possible price and hence attract most of the business tourists globally.

Due to political turbulence the business pertaining to the tourism and hotels affected a lot in some regions of UAE and ultimately affects the Jumeriah group in the region.

Lack of proficient training and development to the human resource in the hotel industry act as a major barrier in the quality service deliverance of the group.

Customer tastes and preferences and market trends pertaining to the hospitality industry changes dynamically and hence there is difficulty in the implementation of the latest trends frequently due to the limitation of cost and time.

Increase in the number of guest houses act as hindrance in the development of hotel business.

Various economical range hotels which provide the services at the cheapest rate are the major barriers in the developmental path of Jumeriah group (Jumeirah Group, 2008).

Competitiveness of Jumeirah’s Pricing Strategy:

Jumeriah provides a wide range of services in the hospitality business which encompasses a wide array of activities for the customers inclusive of diving and photography. With respect to the pricing of the hospitality services, Jumeirah ensures that the prices are maintained at competitive levels in keeping with the current market standards for pricing of hospitality services. Then exact pricing of the hotels and resorts have not been disclosed by the organization but from the reports available, it can be deduced that Jumeriah has competitive pricing strategy for its services (Course Pricing).

The pricing of the various courses offered by the organization are described as follows:

Certification Courses
AED

e-Scuba Diver

1,450

e-Open Water Diver

1,850

e-Open Water Referral

1,000

e-Rescue Diver

1,850

Emergency First Response

700

Experience Programs
AED

Discover Scuba Diving Beach

325

Scuba Review (inc two o/w dives)

650

Scuba Review Pool Only

300

Bubble Maker (ages 8+)

275

Seal Team (ages 8+)

1,500

Master Seal Speciality Dives

275

Instructor Development Courses
AED

Dive master

3,000

Assistant Instructor

3,000

e-Open Water Scuba Instructor

4,000

PADI e-IDC

7,000

IDC Staff Instructor

2,500

Master Scuba Diver Trainer MSDT

2,500

Emergency First Response Instructor**

2,500

Speciality Courses
AED

Wreck Diver

1,400

e-Enrich Air Nitrox

700

Deep Diver

1,600

Peak Performance Buoyancy

700

Search and Recovery Diver

1,400

National Geographic Diver

1,200

Underwater Navigator

1,200

Digital Photographer

1,200

Oxygen Provider Courses

800

Night Diver

1,200

Musandam Courses
AED

e-Open Water Courses

2,550

e-Adventure in Diving

2,550

Source: (Course Pricing)

These prices are in accordance with the industry standard for the pricing of these services which is indicative of the competitiveness of the pricing strategy of the organization. In terms of the costs incurred by the company in obtaining raw material and resources for their business units, they are able to source the requirements at competitive prices. Moreover they have undertaken efforts to minimize their operational costs by adopting green practices and this has enabled them to maintain their prices at adequate competitive levels (Course Pricing).

Competitive Strength and Leverage of Jumeirah Group in comparison to its Rivals:

Jumeirah is faced with adequate competition in the hospitality industry from major organizations that have provided competition on a global scale also. The main competitors of Jumeirah group are:

Hyatt Hotels Corporation

Fairmont Raffles Hotels International Inc. (Corporate Responsibility Report 2008)

Four Seasons Holdings Inc. (Corporate Responsibility Report 2008)

Jumeirah is able to manage the competition in the market adequately and this has been made possible due to the continuous adaptation of the company to the environmental changes and the incorporation of the technological advancements to provide a comprehensive set of services aimed completely at achieving consumer satisfaction. Jumeirah Group is credited with having some of the most complex and biggest projects in the hospitality industry which itself speaks about the high quality standards that the organization has assured in these facilities (Corporate Responsibility Report 2008).

The organization also has its projects in America, Europe and Asia Pacific. In these regions also, the company is able to successfully manage the competition by providing a wide range of consumer oriented services are competitive pricing. One of the main strategies of the organization has been to constantly upgrade themselves in terms of technical infrastructure and the aesthetic ambience in the facilities. It is this feature which has provided Jumeriah with a significant leverage even in the international hospitality market (Corporate Responsibility Report 2008).

The company has started pondering over the possibility of entering conservative foreign markets such as China as they have highly prospective business opportunities. Moreover their advanced technical infrastructural knowledge has enabled them to compete effectively even in new markets and their portfolio of globally acclaimed projects has enabled the creation of a strong brand image by means of which the organization is able to effectively reach out to the target consumer segments (Corporate Responsibility Report 2008).

Strategic Issues and Challenges in the Achievement of Strategic Objectives:

The achievement of strategic objectives is a challenging task and is easily affected by the presence of environmental cha

Introduction

Dr Jim Macbeth (2005, p.963), a lecturer and researcher in Australia who specialises in tourism research, has put forward the argument that, in the modern world, the stakeholders involved with the tourism industry, primarily the educators, developers and providers, need to find an “ethical” stance that will create a natural and appropriate platform for studying sustainability in tourism. To assess the validity of this assessment, one has to first consider the way that tourism research has been conducted and evolved in recent decades, together with the approach that has been used by the tourism industry in dealing with and combining the ethical and sustainability issues. From this a discussion on the relevance of ethical issues that are needed to address sustainability can be developed.

Tourism Research

As Dr Macbeth (2005) observes, historically, tourism research had evolved into a multi-faceted approach, which is based upon the four main threads outlined in the study conducted by Jafa Jafari (1990). In the initial stages, such research concentrated mainly upon the economic aspects of the tourism process. Being directed in this manner, the result of this research tended to emphasise the fiscal benefits that developing tourism would bring to a particular destination and the commercial organisations. However, with the increasing prevalence of the implementation of the economic research and their impact on destinations, researchers began to ask questions about the adverse social and cultural effect tourism was having. These two processes covered the tourism industry through the era of growth in mass-tourism.

Alternative Tourism

The third stage of tourism industry research development moved to the study of a new tourism phenomenon, alternative tourism, Initially, this was just seen and studied as a different level of tourist consumer, one whose demands and expectations were more than just the for the sun, sea and sand vocation of the mass-market vacation. These are the tourist who want independent and self-fulfilling vacations, ones that provided a unique level of escape. They were seeking the more active vacations, ones that gave the feeling of “self-autonomy and self-invention” (Cohen and Taylor, 1992, p.25)

It was as a result of this movement that the educational institutions, particularly universities, became more interested in treating tourism as a bona-fide study subject. Universities increasingly offered courses aimed specifically at tourism as they took a deeper interest in the subject. Jafa Jafari (1990) was also correct in his prediction that the global educational commitment to tourism has increased at a faster rate from the date of his publication than it did previously. In addition, the educationalists, scholars and researchers have expanded the areas of their research into other and dedicated aspects of the subject.

Sustainability

In the last two decades two areas of tourism have attracted particular attention in educational and research, these being sustainability and ethics, in that order. Sustainability, which has been a driving focus in business for several decades, was the first area that caught the interest of tourism researchers. Initially it was approached on the basis of how to protect and maintain the attraction of destinations that were experiencing mass tourism growth. However, with the advent of increasing concerns regarding protection of the historical and natural environment, together with the increased interest in the physical damage that man was causing the climate, the scope of research into sustainability in tourism broadened significantly. Studies were conducted into ways in which destinations of historical and cultural interest could be exploited for tourism purposes, and to the economic benefit of the local community, whilst at the same time ensuring that the sites remained intact and did not become damaged or adversely affected by the increasing tourist traffic influx.

Sustainability in natural destinations also received a lot of attention. The question of how one managed the dichotomy of conflicting issue that arise between the expectation and perception of the tourist consumer on the one hand, and the sustainability requirements of the destination on the other, were issues that resulted in a number of studies. For example, as Dr Macbeth (2005) has observed in terms of “wildlife” tourism, one has to decide how far to provide the natural experience of wildlife adventure that the tourists demands, whilst at the same time allowing the wildlife the ability to be sustained in their own environment. The discussion as to whether limited captivity, as is the case of the safari parks of Africa, provided a sustainable answer, namely would it still provide the experience that the tourist consumer required although not strictly a natural experience, was undertaken. One study into this specific subject by Newsome, Hughes and Macbeth (2005) showed that captive wildlife, seen in a natural setting, received a positive response from the tourists, fulfilling their expectations, whilst at the same time this environment offered some protection for the animals and their habitat. Similar issues and concerns have arisen regarding the tourist attraction to natural places of outstanding beauty, such as lakes and mountains. Here again, studies have concentrated on the complex issue of how to satisfy the tourism need without allowing that need to destroy the environment being enjoyed.

However, problems began to develop when the theories were put into practice. As Fennell (2006, p.1) mentions in his book, a “negative backlash that has come about regarding the so-called ‘new tourism.’” One of the main reasons for this was that not all of the stakeholders involved in the tourism research were being adequately considered. As Fennell (2006, p.4) explains, there are three significant human sides to this triangle, being the tourist, the organisation that arranges the travel or vacation, and those who reside at or close to the destination. As a result of these mounting concerns, the issue of “ethics” began to arise.

Ethics

Ethics are codes that are derived and constructed from the moral value that is attached to an action, and they apply to every aspect of our lives. In other words the fundamental ethos of ethics dictates that the action or behaviour of a person, group or organisation should be appropriate to the issue and be seen to be conforming to the expectations of those affected by that behaviour (Fennell 2006, p.57).

Like the word “sustainability”, the term “ethics” has in recent years become a featured part of the rhetoric within the business world as a whole and the tourism industry is no exception (Pearce, Moscardo and Ross 1977, p.89). Much is written in promotional material by tourism organisations about the ethics of their product and the ethical principals by which they work. In fact a plethora of ethical codes have been produced for all tourism industry stakeholders including, “codes of ethics for travellers; codes of ethics for tourists, for government, and for tourism businesses. Codes for all… ” (Fennell, 2006 p.241). However, partially as a result of the fact that such codes were not considered to be sufficient, and did not respond to the issues that were being raised, tourism researchers such as Jim Macbeth (2005) and others began to study how ethics should be viewed and used when dealing with the problems of sustainability within tourism. To do this meant that one had to look at ethics from the point of view of all shareholders, which, when addressing the three mentioned in Fennell’s (2006, p.4) study, meant understanding the effects that tourism policy and planning had on them. In addition there is the ethics related to the impact vacations will have upon environmental issues and how to handle these facets.

In term of the application of ethics to the tourist consumer, research has to consider both aspects of these stakeholders. Not only is there the moral and ethical issue of ensuring that the tourist perceptions and expectations are honestly matched, but there is also the tourists own ethical standards and how they impact upon the success of otherwise of the sale of the destination product. The authenticity of the wildlife issue has been mentioned previously. Although, the majority of tourists considered the “captivity in natural surroundings” to be a natural wildlife experience, is it ethical for the destination to be portrayed in this manner? Similarly, is it ethical for the wildlife to be subjected to this sort of unnatural control simply to satisfy the needs of the tourist consumer?

The tourist attitudes to “alternative tourism” have also changed. The tourist consumer has become more aware of the environmental issues surrounding destinations and vacations. As Pearce, Moscado and Ross (1997, p.152) explain in their study regarding the tourist relationship with the destination they are visiting, the “environmental attitudes to tourism are not held in isolation but, for some citizens, are a part of a larger environmental ethic.”

An increasing number of tourists no longer expect their vacations to include all of the environmentally damaging aspects that were previously provided, neither do they expect the planners and policy makers to develop areas for vacations to the detriment of the environment; historical and cultural values. Similarly, they do expect those same persons and organisations to act towards the tourist consumer in an ethical manner. The perception is that, whilst providing the destination for vacation, this should be conducted in an ethical manner, ensuring that the correct measures are taken to ensure sustainability of the site and those communities, wildlife and natural resources that depend upon it.

Brokers

Brokers include all of those parties that have an interest in providing the destination and its activities to the tourist. This includes the local governments and policy makers, those who develop and maintain the sites, such as the hoteliers and attraction owners, and the sellers, being travel agents. All of these organisations need to address ethical issues that attract to the services and facilities they provide.

Research has shown that many of these operators and brokers are already promoting the ethical aspect of their service, and are claiming that they have taken on board the demands of the consumer. For example there are corporations whose “Ethical tours claim to combine environmental education with minimal travel comfort, help protect local communities and environments” (Mowforth and Munt 2003, p.51). However, research and studies undertaken cast doubt on many of these claims. As Mowforth and Munt’s (2003, p.202) studies show, whilst the terms “environment,” “sustainability” and may appear in the organisation’s publicity to promote their ethical stance, it does not necessarily mean that these are factual claim. One representative, when questioned by these researchers in regards to their corporate responsibility to inform their consumers about the affect of tourism, responded that their primary task was to sell vacations.

Much of the research work that Dr Macbeth (2005) has undertaken over the years, has been specifically targeted at endeavouring to create a platform which allows these organisations to address the ethical issues that face them in the provision of destinations and services, so that the claims made can be supported by genuine action. Macbeth has provided both theoretical and practical examples of how a destination can be designed in such a way that it incorporates the needs of all the stakeholders, whilst at the same time limiting the damage that can be caused by unethical methods. This includes how to involve the communities at all levels of the development of the destination and its running; ensure safety of the local environment, historical venues and places of interest; and at the same time presenting the destination in an ethically positive manner that will still address all of the tourist consumer demands and expectations and sustain tourism usage.

One of the most difficult ethical issues facing tourism today is the community that live around or are involved in the destination site. This is especially true in areas such as developing countries and where there is a new destination being developed or exploited, as well as areas that have not had previous experience of such ventures within their locality.

In the case of communities in and surrounding new destination developments, there are a number of ethical issues to be addressed. For example, whilst most may desire the benefit of such a development, Dr Macbeth believes that the developer has an ethical duty to ensure that the community is fully aware of the impact that the developed destination will have on their lives, environment and, potentially, their culture. It is accepted that this is not an easy task to achieve, particularly as with no previous experience by which to make a comparison, these communities may not fully comprehend the impact even when it is explained to them. Nevertheless, as the case studies and actual projects carried out by Dr Macbeth and his students have demonstrated, it is possible for such an understanding to be achieved (Jim Macbeth 1997).

Community reactions are very important to the successful development of any destination site. Therefore their involvement with and acceptance of the project is important to achieve. As Pearce, Moscardo and Ross (1997, p.6) confirm, “the issue of how communities shape and respond to social and environmental changes is a driving factor in assessing community response to tourism.”

Environment

Finally, there is the issue of ethics in respect of the environment. In the current climate of potential threat to wildlife, dwindling natural resources, locations and the larger environmental issues, destination managers have an ethical duty to play their part in its sustainability. They also have a duty to ensure that their development does as little environmental damage as possible and contribute to the protection of the environment, rather than add destructive forces that will increase the dangers and damage.

This includes such matters as energy conservation, emission control, and protection of wildlife, heritage and local communities. For example, with wildlife it is important that the planners are aware of any endangered species located within the destination target area, and ensure that the neither the development, nor the resultant tourist consumer activity can in any way add to the endangerment of that species.

Ethical research

It is important that, prior to the commencement of any development, research is undertaken to ensure that all of the ethical issues are addressed. The organisation needs to understand the impact that construction projects might have on the local environment, and its impact on issues such as wildlife protection and climate emissions. The research must also evaluate the effect of the development on the local population, its culture and heritage. One important proviso of the research that is undertaken is the independence of the researchers who undertake the study. Whilst, as is increasingly the case with studies and research projects that take place within universities, the planners and policy makers may contribute funding for the project, it is essential, and ethically correct to ensure that these people and organisations are able to carry out their tasks without any influence or pressure applied by those organisations.

The purpose of such research is to reach a conclusion that provides for an ethical stance that all of the stakeholders can agree is desirable and, in addition, provide recommendations as to how the project and the ethical stance can be achieved and protected. In essence it should form the basis for “the purpose of identifying a template from which to aid in the development of tourism ethics.” (Fennell, p.197)

Conclusion

From the various researches that have been studied in the preparation of this paper, it is the author’s opinion that the hypothesis statement made by Dr Jim Macbeth is supported. There is a need for the educators and other stakeholders in the tourism industry to review the issues and construct an “ethical stance” that provides for a sustainable platform. It is equally importance that the strategy evolved from such a stance is seen to be effective and transparent to all concerned, with a determined effort to address and maintain all of the issues that constructing and maintaining a vacation destination involves. It is equally important to ensure that any studies and researches undertaken in an effort to achieve such a position are arrived at as a result of full discussion with, and involvement by all of the stakeholders involved with the product.

Fennell (2006, p.346) observes, “In allowing ethics into tourism, we open the door to philosophy and the humanities.” Whilst it is accepted that this is the case, in the view of the author, there is no possibility of omitting this factor from the tourism research process. Ethics is an integral part of the tourist consumer’s human decision process. It is the stance that is taken on those ethics and the way it is approached that is important.

References

Butcher, Jim (2003). The Moralisation of Tourism: Sun, Sand… and Saving the World? Routledge. London UK.

Cohen, S. and Taylor, L (1992). Escape Attempts. The Theory and Practice of Resistance to Everyday Life. Routledge. New York. US.

Fennell, David A (2006). Ethical Tourism. Channel View Publications. Clevedon, UK.

Jacobsen Damien, Carson Dean, Macbeth Jim and Rose Simon (2005) Prosper Pilot Case Study. Sustainable Tourism Cooperative Research Centre. Queensland, Australia.

Jafari, Jafar (1990). Research and Scholarship: The Basis of Tourism Education. The Journal of Tourism Studies, Vol.1, No.1. Queensland, Australia.

MacBeth, Jim (2005). Towards an Ethics Platform for Tourism. Elsevier Ltd. Annals of Tourism Research, Vol 32. No. 4, pp 962-984. Oxford, UK.

Macbeth, Jim (1997). Tourism, Policy and Planning in Australia and New Zealand: Issues and Cases. Irwin Publishers. Sydney, Australia. Section 3, Chapter 13.

Mowforth, Martin and Munt, Ian (2003) Tourism and Sustainability. Routledge. London, UK.

Pearce, Philip L., Moscardo, Gianna and Ross, Glenn F. (1997) Tourism Community Relationships. Elsevier Ltd. Oxford, UK.

Cohen, S. and Taylor, L (1992). Escape Attempts. The Theory and Practice of Resistance to Everday Life. Routledge. New York, US.

Newsome, D, M. Hughes and J. Macbeth (2005) Captive Wildlife Tourism in a Natural Setting: Visitor Satisfaction as a Measure of Success at Barna Mia, Western Australia. Journal of Ecotourism. Vol. 4, No. 2, pp73-91. Australia.

This report will focus on the environment in which GL events is currently operating. GL events started as a small company based in Lyon in 1978 providing furniture and stands for exhibitors. Through mergers and acquisitions, they have progressively evolved to become an important player in today’s exhibiting and event world with 34 venues around the world, an event and exhibition full-organising service and a portfolio of 250 trade-shows in various industries (food & beverage, sport & leisure, health, etc.).

Influencing all trends and being influenced by all trends, the exhibition and events industry is in the centre of it all. No company can succeed without being aware of the environment it is evolving in. In the exhibition and events industry, companies need to pay particular attention to details impacting not only its industry directly but also every other sector of activity as it would soon have repercussions on future events, exhibitions, product launches, etc. For this reason, a good PESTEL analysis for the industry needs to cover a broad range of issues and analyse many trends which may not influence events yet but could soon be a threat if companies do not react and stay in the times.

This report will focus on a PESTEL analysis (Political, Economic, Social, Technology, Environment, Legal) of the exhibition and events industry conclude by establishing which factors GL events should most take into account going forward as they could be potential threats or areas of opportunities in the years to come.

Political:

There are two main political factors influencing the industry today. One is the increasing political pressures to make regulations and policies to reduce greenhouse gas emissions. We will see in the environmental section that this trend started with consumer awareness but it is no longer just something the clients want to know more about, it has become an obligation. This has greatly impacted the transport industry, in particular airlines which found their image hit as people all around the world pointed to airplanes being a major source of pollution. This impacts the event and exhibition industry, especially at a time when various “green” technologies are evolving to permit meetings, conferences and even exhibitions to take place online (Long, 2009). This will be developed further in Environmental and Technology sections.

The second is the increased globalisation and liberalisation of trade and deregulation (Dwyer, L and Edwards, D 2009). This is very important in terms of number of potential competitors and number of potential clients. Companies need to learn to evolve in a globalised economy, taking advantage of it by going to find new markets, possibly entering into partnerships with similar companies to widen market share and visibility. With this liberalisation of trade comes political pressure to have global higher standards of living. If you do not see your neighbour’s yard, you do not know that it is greener, when you break the fence, you find that it is. It is this situation that developing countries are finding themselves in today. Citizens all around the world can use internet to gain knowledge about how others are living and become envious. Because of this, countries want to attract foreign investment to boost local economies and gain wealth and higher standards of living. This creates opportunities for countries not only to establish new and cheaper production lines but also to display their products in emerging markets. Last week for example, Apple launched the Iphone4 in China (AFP, 2010).

Economy

This last point brings us to analysing the economic trends and pressures impacting on the exhibition and events industry. Although the UNWTO 2002 forecasted world tourism to grow at a rate of 4.1% annually until 2020 (Dwyer L, Edwards D., 2009) due to rising wealth internationally, the exhibition and event industry has seen a slow in growth since 2005 but a rise in exhibition and event attendance (Biba E, 2008). This puts the industry in a rather awkward position. There are people coming to exhibitions but exhibitors have switched their approach towards events and exhibition.

Indeed, especially with the recent crisis, the first expenses cut by organisations worldwide were advertising and travel. Exhibitions and events being in the centre of this, the industry was hit and forced to react. The expectations from exhibitors will be looked into more fully when we look at the social aspects of the trend but the main ideas are that companies are looking to maximise their ROI (return on investment) (Kovaleski D, 2009) and minimise the perception of frivolous spending (trips, events, etc.) (Events Managers, 2010). In order to do this, companies are squeezing suppliers to get more value for money and investigating the return on investment of their events much more closely and looking at alternatives more then they did before. Companies are not so much cutting their exhibition and event spending so much as allocating it more carefully and with conditions of an assured return (Biba E, 2007). This has changed to job of the event organiser who needs to think of more innovative ways that the company can use to introduce their product. A leaflet handout at the exhibition is no longer sufficient, people want to be amused, entertained, really involved in the product (Furness V., 2007). Because of this, the industry is moving away from major events in favour of smaller, more intimate events where companies can really interact with potential clients (Biba E, 2007).

Another aspect companies are putting under the microscope is how to measure ROI generated from social networking and e-marketing. Indeed, if an event is posted on Facebook, LinkedIn, various industry blogs and online magazines this all takes resources in terms of man-hours put into promoting the event on these new channels but how can a company measure that this was efficient? How can the event planner know that the Facebook invitation attracted the client and not some Email they receive every year which pushed them to look for a Facebook event? (Terrero R, 2009). Today, there is little way of knowing exactly what path a client took and what really convinced them to attend your particular event.

Social

Indeed, the main goals of events and exhibitions are brand awareness, brand preference and networking. Although brand awareness can be achieved through various communication mediums (advertising online, billboards, TV, etc.), it is not the way to create brand preference. Brand preference is achieved through interaction, experience of the brand with the client (Kovaleski D, 2009) and leads to better ROI for the company. This means that exhibition halls and event organisers are not expected to provide a massive attendance so much as a good promotional space and real, targeted potential buyers (Biba E, 2007). From the buyers’ perspective, they want to experience and know the brand as a whole. With globalisation came increased competition and consumers now have the possibility to buy from anyone anywhere around the world. The quality and price are no longer the only issues, people and therefore companies look at the triple bottom line. It’s no longer just about economics but also the social and environmental benefits of a product or company.

Clients don’t want a coupon or a price comparison when they come to a product launch, they want to feel and experience the product for themselves (Dwyer L, Edwards D., 2009 and Furness V., 2007). There needs to be a real interaction between companies and clients. Companies want to build a rapport with their clients, want to become part of their lives. This has forced exhibition halls and event managers to re-think space use and create sections that are dedicated to sitting down in a relaxing atmosphere with a drink to discuss business more casually. The bottom line is still to get the client but the approach is much friendlier then boxed up in a meeting room (Kovaleski D, 2009). This also has an impact on stand design. Exhibitors are encouraged to pay more attention to details such as carpet colour as it has been shown that if the carpet colour of the stand is different from that of the exhibition hall, it may create a barrier and deter clients from approaching (Kovaleski D, 2009).

Technology

With the development of various technologies, companies have the opportunity to have a virtual event run along-side of the live event. This allows them more time to prepare the client for the interaction and pursue the relationship after the event (Furness V., 2007 and Kovaleski D, 2009). This phenomenon of virtual event is not only to accompany live events, there are now events using only virtual platforms, simulating a physical event on the online world. Platforms such as Second Life are being used by companies to reach potential clients without having to create an event in one physical place. This has the advantage, if not necessarily of price reduction, but to be able to reach clients who may not be prepared to travel to meet you. You can meet them where they are all at once (Biba E, 2008). Using 3D technologies, your virtual exhibition can be as simple as visitors being able to look around at the different stands and as complex as re-creating the event in a completely online world (web chatter, 2010). This is not to say that virtual events will completely replace live events because, as we have seen, people still want to interact and know who they are dealing with but it certainly does replace certain live events already (Biba E, 2007).

Another important aspect of the new technologies that the exhibition and event industry should be aware of is the democratization of the internet. This means two things. First, even small firms can bring competition to the large, well-established event organizers if they have good SEO (search engine optimization) and general web-marketing skills as they have equal visibility (Dwyer L, Edwards D., 2009). Second, through UGC (user generated content) anyone can post their feedback about their experience with a certain organizer and make it available to the world (Papathanassis A, Buhalis D, 2007). This is good news for companies who have good relations with their clients and suppliers but will be difficult for companies who were focusing on “one-shot” clients and therefore not paying much attention to details.

The final aspect of technology refers to the traditional definition of technology, ie: “the application of scientific knowledge for practical purposes, especially in industry” (Oxford Compact dictionary). Here we are referring to how to build ecologically friendly stands? What technologies can we use to handle the new products that now need to be used in order to create a “green” stand?

Environmental

We are now obviously diverging to the environmental issues around the exhibition and event industry. Indeed, it is becoming increasingly important for companies to be perceived as environmentally aware (Biba E, 2008). This presents a good opportunity in term of cost reductions as decisions such as travelling less can be explained as an “environmentally gesture” rather then cost-cutting in a bad economy (Events Managers, 2010). However, it presents a challenge for events and exhibition companies who now need to develop “green” stands made with ecologically friendly materials and production techniques and purchased from local suppliers to avoid pollution from transport (Biba E, 2008).

Another aspect the exhibition and event industry will need to look at closely is the impact that global warming will have on their choice of venue and the viability of these choices with respect to client attendance and attractiveness (Dwyer L, Edwards D., 2009). Indeed, sunny destinations which are very pleasant to hold events at may be changed for the worse in the next 30-50 years while new destinations will establish themselves as more favourable climate-wise.

Legal

The final point we will view is the legal aspects that the industry needs to pay attention to. The policies regarding the reduction of greenhouse gas emissions and the liberalisation of trade have lead way to many legal documents and laws by countries around the world which need to be followed by event and exhibition organisers and by venues to make sure they are acting within the limits and scope of the law.

However, an important legal issue is the terms and conditions put forward by events and exhibition planners and venues. First, with regards to particular cancellation fees, they need to protect themselves without being outrageously unfair to the potential client which is looking at cancellation fees and possibilities more closely since the crisis. Second, with respect to the inflexibility of minimum numbers, if venues hope to attract client, they need to consider the advantage of having one definite client with a contract who may not bring exactly 1000 participants versus one potential client who is still shopping around and may never sign (Event Manager, 2010).

From this PESTEL analysis, we can draw several conclusions for GL events next step. First, it is clear that the new technologies, though they will not fully replace live events, are certainly complementing them and they are here to stay. GL events could take advantage of this by creating a network with all its venues. When one event is organised in Nice for example, they could offer the possibility of extending it via 3D conferencing tools to other of their venues around the world. This would increase the potential number of attendees who would not have to sit in front of a computer to enjoy the virtual event but would benefit also from meeting with others who are also in their geographical areas and enjoying the event virtually. People in China could enjoy the conference of the event taking place in Nice and have the opportunity to network with other people afterwards via video-conferencing and face-to-face with people who were also unable to attend the meeting.

A second opportunity GL events could take advantage of is the growing importance of the perception of being environmentally friendly which pushes companies to invest in “Green” stands. Through their event organising service, GL events should try to develop the competencies to offer this possibility to their clients, if possible at a similar cost, to make sure they are in keeping (and even a little ahead) of their times.

In these fast changing times, the opportunities are still up for grabs but will soon become threats if venues and organisers do not react quickly.

This report is about Ocean Park of Hong Kong – one of the largest amusement ocean park in the Orient and even in the world. Situated in financial center of Southeast China this park – add some info about park!!

In this report we are going to cover such topic as strategy concepts of Ocean Park, external and internal environment of organisation and its corporate, business-level and international strategy. On base of data collected we’ll give our recommendation and advice to CEO and Board of Ocean Park of Hong Kong about Park’s strategy to the next 10 years (from 2005 to 2015).

The main aim of this report is to provide in-depth strategic analysis to CEO and Board members. Thus, this work is focused on challenges, opportunities and threats of organisation, its culture and economic aspects, strengths and weaknesses of organisation, core competency of ocean park in order to help to improve it in anticipation of arrival of Hong Kong Disneyland.

Strategy concepts and vocabulary
-Mission (Strategic purpose, not specified)
Ocean Park provides all guests with memorable experiences that combine entertainment and education, while inspiring life long learning and conservation advocacy. Our aim is to maintain a healthy financial status, while striving to deliver the highest standards of safety, animal care, products and guest service.
http://www.oceanpark.com.hk/html/en/footer/corporate-information/vision.html

-create all activities for perfect family holiday

-increase involvements of visitors in environmental issues and lives of animals

-Goals and objectives to fulfill its mission

“Boost the number of annual visitors from four million in 2004 to five million by 2010”

“To make a 0,5 per cent contribution to Hong Kong’s gross domestic product (GDP) in 2010” (page 7)

-Vision (More specified)
http://www.oceanpark.com.hk/html/en/footer/corporate-information/vision.html
Ocean Park aspires to be a world leader in providing excellent guest experiences in a theme park environment connecting people with nature

– Become number one marine-based park for each family not only from Hong-Kong but also from mainland China.

– To be main attraction for all tourists, who visit Hong-Kong

-What performance measures would you use to determine the success of Ocean Park?

-It is the hometown favorite. It had been a long-time favorite of several generations ((it’s been operated for more 28 years). Many local people were sympathetic to Ocean Park. People who had visited the park as children were now bringing their own children to visit the park. Its reputation even extended into mainland China. It had become a fixture of Hong Kong’s cultural heritage. (p.5)

-The number of visitors in 2004 is 4 m of people (with daily maximum capacity 35,000 people).

-Total revenue in 2004 was 536, 2 HK$ m comparing to 428,3 HK$ m in 2003, surplus for 2004 year was 95,7 HK$ m comparing to deficit 4,1 HK$ m in 2003.

– recognizability of new brand (Whiskers became a household name in Hong Kong)

-Who are the various stakeholders in Ocean Park organization (how might they impact on its purpose and mission)?
Stakeholders, who help to achieve park’s purpose and mission:

Hong Kong government, Home Affairs Bureau and the Tourism Board, employees of Ocean Park corporation, its visitors (customers).

Interfere with achieving park’s purpose and mission:

Activist groups (certain environmental groups and animal rights activists) – forbid of buying and transportation exotic animals to park, trade associations and unions (bus companies and taxi drivers) – forbid in building a mass transit railway (MTR), competitors – regain market share.

External Environment
-Conduct a PESTEL analysis for Ocean Park, identify the key driving forces for change facing Ocean Park; Rank key driving forces based on their predictability and potential impact on Ocean Park, then develop some scenarios and identify implications of these scenarios for Ocean Park.

PESTEL:

Political:

Government support

Improving relationship between Hong Kong and Mainland China

Promotion of tourism

the easiness of the restrictions and promotion of the free travel of China in 2003 that helped to inject a new life to the tourism industry of Hong Kong

environmental law

Economic:

Growth and development of the global amusement park industry

Disneyland’s arrival

Increasing number of mainland visitors

Increasing standards of living in midland China

Raise and spend HK$5.55 billion

Social:

Major events and activities (peak seasons and holiday themes: Chinese New Year, Easter Holiday, Summer Holiday, Halloween and Christmas)

Media, advertisement and publicity, required for these special events

Change of demographic (Population growth rate, age distribution, size of families)

Increasing the cost of labor and more guarantees for employees

Negative affect of Outbreak of Severe Acute Respiratory Syndrome (SARS) outcome

Technological:

Development of the amusement machinery industry

Increasing popularity of new technologies for consumers (internet, mobile, digital camera)

Amortization of park equipment

Developing of new transport system (for example, a mass transit railway (MTR))

Research and development activities (creating of new park amusement)

Environmental:

Opposition from certain environmental groups about the importation of wild animals to Ocean Park

Expenses on maintenance of exotic animals

Protests of animal rights activists against relocation of animals

Climate change (rain season in spring, hot in summer, typhoons in summer)

Legal:

Approval of Town Planning Board for hotel, Legislative Council for MTR station.

Restrictions on mergers

Employment laws

Key driving forces and their ranking :

1)Global changing in tourism for Hong-Kong and Asia-Pacific region (development of tourism in region)

2)Raise and spend HK$5.55 billion from private and government loans to revamp park’s well-worn product line (approval of development plan)

3)Disneyland’s arrival – worldwide success of main competitor-Disneyland, coming to Hong Kong (Disney’s success or failure)

Binary table of scenarios for Ocean Park’s key drivers (in decreasing order of their impact on park):
Development of tourism in region
Approval of development plan
Disney’s failure
Scenario
+
+
+
Successful scenario
+
+
–
+
–
+
Middle scenario
+
–
–
–
+
+
–
+
–
–
–
+
Failure scenario
–
–
–
-Define Ocean Park’s industry and conduct a five forces analysis: Which are the dominant forces in the industry? How may the five forces change? What are the underlying dynamics which are driving these five forces, and how may the five forces change? What are the impacts on key competitors and on Ocean Park? What can be done to influence the impact of the five forces?

Five forces analysis for amusement park industry:

1) Threat of New Entry

In terms of the amusement park industry, the entry barrier is high due to the need to invest large amount of financial resources (for park equipment, human resources maintenance), a lot of time required for park’s planning, construction, development and launching, a lot of licenses and legalization required (safety, sanitary, security etc.). In addition to the amusement park required land for a full scale development. This factor is important because Hong Kong has a high land price real estate market.

Re-write in own words!!!!!

2) Threat of Rivalry:

It is important to consider that with lack of differentiation, visitors’ choice will greatly over the price and service, thus causes pressure for the intense price and service competition. Due to high threat of rivalry, Ocean Park is implementing different plans and activities such as redevelopment and introduction of new attractions in order to catch the attention of the visitors and differentiate themselves from rivals. There are no rivals with exactly the same range of products. Disney’s arrival is only expected.

Re-write in own words!!!!!

3) Threat of Substitution:

(where this information from?? – I like this point!))

The main threat of substitution is Hong Kong Disneyland & Wetland Park, a new international theme park and an educational park (Appendix 2)??? Apart from this, there are other forms of substitution. From the education side, Hong Kong residents can switch to go to Cultural Centre, Mai Po Wetland, Hong Kong Zoological and Botanical Garden. For entertainment purpose, they can visit the Karaoke, Cinema, Game Centre, or have a day trip to China.

4) Bargaining power of buyers (visitors):

(where this information from?? – I like this point!)

-Tourists

Tourists have a low bargaining power as long as “must see” image successfully built-up and the Park cannot be replaced by other substitutes. Therefore, Ocean Park focuses to build up this image especially in Asia.

– Local residents

The buying power of local resident is high since they have many choices as mentioned above. The switching cost is relatively low. Also, Hong Kong people like new experience and their loyalty to the product are generally low. The Park, therefore, launched difference programs like “Big Five” events with difference theme each year to bring new excitement and experience to them. Besides, special discount in low season and year pass intent to attract…???

5) The power of suppliers.

Suppliers have quite high power. Thus, construction elements of amusement rides are huge and complicated, that’s why park is highly tied with supplier. Otherwise, this market is developed and the choice of suppliers is become greater now. While constructing buildings (hotels, etc) with particular contractor park can’t easily change to another contractor because of high switching cost). The situation with the exotic animals is such as Ocean Park can buy in particular country only.

Which are the dominant forces in the industry?

The dominant forces in the industry are: rivalry, buyers and substitutes.

How may the five forces change?

Looking forward, the five forces will change in this way:

-Rivalry will increase with Disney’s arrival;

-Buyer power will increase slightly;

-Substitute threat will also increase;

-Entry threat decrease dramatically;

-Supplier power will also decrease. (Exhibit 2.5 – p.72)

What are the underlying dynamics which are driving these five forces?

Aftermath of economic crises and increasing in number of suppliers will decrease supplier power.

Disney’s arrival decrease entry threat in entertainment park industry.

Developing of new technologies will affect rising of substitutes. Also competitors with new technologies will gain (in this aspect Disney has an advantage)

Disney’s arrival increase demands in diversification of Ocean Park’s products.

Ticket price advantages (185 HK$ for adult ticket at Ocean Park compared to 295HK$ for the same ticket at Disney).

The main rival (Disney) is also same market oriented (families with children).

What are the impacts on key competitors and on Ocean Park?

Five forces much more affect Wetland park – Ocean Park’s key competitor, located at the northern part of Tin Shui Wai, in Yuen Long – than Ocean Park itself, because Wetland park’s products are less differentiated. It has “a 10,000m2 visitor centre, Wetland Interactive World, and a 60-hectare Wetland Reserve.” (http://www.wetlandpark.com/en/aboutus/overview.asp). Arrival of other competitor – Disney and it’s substitutes – doesn’t affect much Ocean Park because it has it’s its own niche.

What can be done to influence the impact of the five forces?

More differentiation of new products, directed mainly to Chinese native culture will affect rivalry, substitutes and buyers. Unique high-quality products and services also will influence buyers. For seeking suppliers big impact will have Internet and special web-sites with best quality of service, characteristics, recommendations and prices.

Conduct a strategic group/space analysis for Ocean Park

There are 2 key competitors for Ocean Park:

First one is mentioned above Hong Kong Wetland Park. It is a conservation, education and tourism facility, consisted of large visitor centre, Wetland Interactive World and a Wetland Reserve. This park provided visitors with opportunities to observe wildlife, awareness and understanding the values of wetlands throughout the East Asian Region and beyond, wetlands conservation. So, it’s mainly about wetlands. The Hong Kong Wetland Park is also going to be a world-class ecotourism facility to serve both local residents and overseas tourists.(ttp://www.wetlandpark.com/en/aboutus/mission.asp)

Compare to Disneyland and Ocean Park, Hong Kong Wetland Park has different facilities and product range (such as themed exhibition galleries, a theatre, a souvenir shop, an indoor play area), provide different services and thus, like Disney and Ocean Park, has its own niche. The range of facilities provided is the narrowest among 3 parks. Thus, Wetland Park can’t meet demand of those visitors, who are looking for excitements and extreme pleasure, which can be found on a rides at 2 other parks.

Who are the main visitors? Is it local or global? Is it has the lowest range of facilities than Ocean Park and Disney? Much lower prices.

The second one – arriving in a nearest future The Hong Kong Disneyland.

After 28 years of operating as a near monopoly, Ocean Park would soon have to compete with one of the biggest names in the entertainment and theme park industry. Moreover, Disneyland targets the same group of park’s customers – families with children.

It has well-known brand and reputation. It’s the world leader in terms of entertainment. Several of Disney’s characters (Mickey Mouse, Donald Duck and Winnie the Pooh) were household names all over the world, including in Hong Kong. Thus, Ocean Park’s mascot, Whiskeys, appear lackluster by comparison. Image, which Disney company holds almost for a century (The Walt Disney Company was founded in 1923) and Disneyland itself (first park was opened in 1955) for half a century (compared to 28 years of Ocean park) helps to attract visitors not only from Hong Kong and midland China, but also from different part of the globe, especially those who are from the USA and Europe.

Among other advantages of Disneyland are:

– location: it could be reached in just 10 minutes from Hong Kong’s airport and less than 30 minutes from downtown Hong Kong.

-at least 5.6 million people were expected to visit the Hong Kong Disneyland during its first year of operation (compared to 4 million of Ocean Park expected visitors).

-the price claimed to be the least expensive among the five Disney amusement parks throughout the world.

-the area of Disneyland is 310 acres compared to 215 acres of Ocean Park.

-5 times greater investment than for Ocean Park.

-Expected economic effectiveness is 3 billion more.

-world-renowned innovation

-high customer service standards

Strategic groups within the entertainment and theme park industry in Hong Kong

Broad

Ocean
Park

Geographical Scope

Global

Product range

Disneyland

Narrow

Wetland Park

Local

Conduct a market segment analysis for Ocean Park: How is the market segmented? How could it be segmented? Where would you position Ocean Park’s products and services? Where would you position the competitor’s products?

Ocean Park is a part of entertainment and theme industry. Its market is families with children. Disneyland – future competitor – applies to the same market. Despite this, Ocean Park has its own niche – visitor from midland China.

Internal Environment
-What resources and capabilities does Ocean Park have?
Resources (what a firm has):

1)Tangible:

-financial – suppliers of money (private and government loans) – expected HK$5,6 billion investment; HK$145 billion economic effectiveness; surplus from operations in 2004 was HK$182,2 million on revenues of HK$536,2 million ???;

-physical – Sea World, marine life and real animals:35 rides and attractions; 3 hotels; favorable and convenient location on the southern side of Hong Kong Island; wide range of new activities, such as the Abyss Turbo Drop thrill ride, seasonal and special events, popular water-related activities, interactive activities with animals, “edutainment” programs, successful Sea Jelly Spectacular and so on.

2)Intangible:

– long-time reputation of park with government, customers,

-new brand – sea lion named Whiskers;

-cultural heritage of Hong Kong

-great number of repeated visitors

3)Human:

-37,100 employees, their skills and knowledge;

-Thomas Mehrmann, new CEO of Ocean Park, and his previous experience at US-based Six Flags Corporation;

Natural and wild life focus (Interactive activities with animals)
Recreation and education
Capabilities (what a firm can do)

-New products, facilities and services development capability – continually adding new features and attractions (such as: a new roller coaster, a subzero Ice Palace, 7.6 million liter aquarium with an underwater restaurant, extra 33 animals species, the number of rides doubled to 70), so, become a nearest future one of the best marine-based theme park with strong connection with nature;

-Keeping park attractions fresh, novel and exciting, while minimizing costs;

– research and development, marketing and sales capabilities: plan to refurbish and rename Ocean Park’s 2 major areas (the Lowland and the Highland), new hotels to be developed, including a five-star boutique, spa-type hotel – this redevelopment plan would be completed in 2012!! – recommendation part too!!, plan to open offices in the major urban areas of Guangzhou, Beijing and Shanghai to enhance promotional activities in Hong Kong and attract more mainland visitors

-new incentive compensation, that linked employee compensation to the financial performance of park

-What might be the competence of Ocean Park?

Core competences – resources and competences which are both valuable to customers and difficult to imitate

-distinctive work culture, with its own norms and practices

-local market loyalty

-unique SmartFun Annual Pass program

-cultural aspect (cultural heritage of Hong Kong), orientation on specific market segment-mainland Chinese visitors,

-long-term reputation, distinct Chinese characteristics

-powerful brand

-customer trust

-primary focus of OP on real nature and wildlife in contrast to Disney’s strengths in cartoon characters, castles, virtual reality and fantasy

-focused on education and the live animal attractions — one of the key elements that will differentiate it from Hong Kong Disneyland when it opens in 2005. (from Echo’s articles)

-cost and differentiation of product (continually adding new features and attractions as well as price advantage over Disney encouraged visitors to return to the park)

-The aerial tram that takes visitors from the entrance side of the park over a hill to the rest of the attractions has become a Hong Kong tourism icon-is it still true?? (from Echo’s articles)

Competitive advantage is explained by the distinctiveness of its resources and capabilities, by offering customers greater value by means of lower prices or greater benefits and service

Competitive Advantages of Ocean Park over Disney:

-long-time reputation, -hometown favorite,

-cultural heritage of Hong Kong, orientation mostly on visitors from midland China

-first-mover advantages

-no need to engage in high-profile advertising and publicity, rely more on word-of-mouth

-more diverse and wide range of products (including Sea World, marine life, real animals plus 35 rides and attractions)

– price advantage: the admission price for Disneyland is expected more than twice higher for child and one and a half higher for adult than price of Ocean park. And visitors from mainland China are very price sensitive. SmartFun Annual Pass program with unlimited admission to the park for its holders within a year, and discounted prices for food, souvenirs

-Infrastructure – 3 hotels had been constructed comparing to 2 at Disney.

-orientation not only on entertainment, but also on education of visitors,

– differentiating by focusing on ecology and conservation issues

-recognizable brand

-In addition to all the American fun at the park, traditional Chinese holidays are still observed (Chinese New Year)

-Disney has its characters, but we have flexibility to mix and match and bring in other entertainment (from Echo’s articles)

-Does Ocean Park build its strategy on its resources, capabilities and competences?
Yes.
Importation of more species
Water/Sea-related construction
Hotel-better recreation
-Are they sustainable? How can they be developed?
Sustainable to some extent, but with some limitation.
For example, it may face the opposition from environmental group.

They can’t relay only on resources, capabilities and competences-they need to be developed, innovated and refreshed, because they may begin to look dated and shabby for their visitors.

SWOT Analysis

Positive impact
Negative impact
Internal environment
Strengths

-Diversified and wide range of amusements (thrills, animals, seasonal and special events)

-product line revamp

-Highly linked with culture of mainland Chinese visitors, knows their demands and behavior

-the main, oldest and most famous amusement park in the country (long-time reputation, hometown favorite),

-cultural heritage of Hong Kong,

-28 years of operating as a near monopoly

-no need to engage in high-profile advertising and publicity, rely more on word-of-mouth

-strong business connection to the local government (support from the government of Hong Kong and mainland China)

-renovation of the park’s brand image

-mascot as a brand

-previous experience of Thomas Mehrmann (new CEO of Ocean Park) in theme park industry (at US-based Six Flags Corporation)

-local market loyalty

-positive image of park

Weaknesses

-Located on a hills-hard to get to some riders-that’s why visitors experienced rides only once.

-different facilities are old and un-attractive and need renovation

-a lot of activities depend on weather???-ask Echo about it

-no substantial capital investment

External environment
Opportunities

-focusing on delivering mainland China’s visitors as well as foreign visitors

-development of new transportation South Island Line (when???-check case-and ask Echo about it) that would cause convenience and fast access direct to the Park for the foreign and local visitors.

-plan to build a mass transit railway (MTR) station to connect OP to the subway grid

-the development and improvement of the amusement machinery can impact the services and features of the organization and its relationship to their foreign visitors.

– raise the standards of park with Disneyland arrival

– fostering sponsorships

– plan for building new hotels (boutique and spa-type) – orientation on luxury tourism – new market segment

Threats

-economical instability (such as the Asian financial crisis of 1999-2001, lasted for 3 difficult years for OP ), outbreak of different diseases, such as Severe Acute Respiratory Syndrome (SARS) in 2003 (Both these factors can affect number of visitors and their buying behavior, worsening the park financial situation)

-arrival of Disneyland Hong Kong

-OP was situated on valuable real estate: it could be shut down and its land could be sold off for other recreational or commercial purposes.

Recommendation – p.6-7!!!

(recommend to use this business connection for future purposes, such as building a subway line for the visitors (it’ll happen in 2007). Say, in 3 years

Build a mass transit railway (MTR) station for connection to the subway grid. Till 2015)

(recommend to start innovation process, it will take about 6 years). Say, in 5 years

We have defined our relevant market for Flydubai as a low cost carrier within the product form level. Being positioned as a low cost national airline carrier, it’s facing a high competition from other national airlines which force the relevant market to be within the product form. (For more information on the relevant market please refer to appendix 2).

This paper will focus on presenting an environmental scan of the airline industry within the Middle East region during the time frame of 3 years (2009-2012). In order to do so, we will identify the significant trends and their consequent implications on Flydubai relevant market. This report will include an in depth review of the macro, micro analysis and its implications of Flydubai relevant market in the next three years.

Body:

In identifying the major key trends in the macro environment of Flydubai, we have addressed several issues that include the political, social and economical trends.

Flydubai was established by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai orders in march 2008 and started its operation in its first flight to Lebanon on June 1st 2009.Being fully owned by Dubai government and enjoy the full facilities offered in terminal 2 at Dubai International Airport, the company is having a competitive advantage compared to its rivals in the market as it enjoy the full government support and airport services. Furthermore, the current government trend in the labor force is towards emiratization and protecting labors rights. Being a part of the Fly Emirates Group, the organization will face no problem in emiratization as it will follow Fly Emirates emiratization strategy. The major challenge that Flydubai will face is being able to offer high paid jobs and reduce its operational costs as it is considered a low cost airline company.

Living in the current financial crises era, Flydubai was established in one of the most difficult time the country economy had faced in the last 25 years. “Falling oil prices, cooling real estate and construction markets, together with a slowdown in the tourism sector, especially in Dubai, means the UAE is expected to post low or possibly negative GDP growth in 2009”, according to analysts (Arabian Business, 2009). This information may be considered negative to many airline companies but it may be positive to a low cost airline like Flydubai as people are now focusing more in reducing their expenses as the incomes are reduced. This means their tendency of consumers focusing more on prices is increasing.

Furthermore, consumer behavior is changing towards low cost airlines especially in the Middle East region as consumers are persuaded by low prices and a better service offered by low cost airlines. According to a study done by Arabian Business website, it was found that 83 percent of the respondents would switch their preferred airline carrier, for a cheaper price, while 17.6 percent believed they would consider alternatives and trade off between the discount and lost air miles. It can thus be inferred that pricing plays a significant role in consumer behaviour and the decision making process especially in the current economic downturn era (Glass, 2008).

According to Dubai department of Tourism and commerce marketing “3.85 million tourists had visited the emirate in the first half of 2009, a five percent increase on the same period of 2008”. This figure strongly shows the current tourism industry market and how attractive it became even though of the current economical downturn. Other figures expect that the number of tourists will fall compared to 2008 figures but most figures have stated that there will be a positive growth in 2010. This figure shows that Flydubai will see a future growth rates in the coming 3 years as terrorism sector restore its high figures after overcoming the current downturn.

As observed by Andrew Cowen, CEO of SAMA Airlines, the market is shifting from the traditional major airlines business travel towards low cost carriers for trips within the GCC. Business travelers are changing their perception of low cost carriers, supported by the current economic downturn and the increase number of foreign businesses within GCC countries entering the UAE. This shows a trend of an increasing demand for low cost carriers in the next three years (High time for low cost carriers, 2008).

(For in depth information on the analysis of the macro environment of the airline industry please refer to Appendix 3)

In identifying the major key trends in the micro environment the following aspects that includes, Customers, Employees, media, shareholders, competitors and suppliers.

Customers who are price conscious are concerned with low cost airlines. Flydubai has focused on pricing strategy and flexibility because these two factors play a big role in determining the customer’s decision process on which airlines they choose to travel with. Moreover, the number of tourist from around the world including the region will grow more than 40% in the next 3 years in Dubai (www.realtyna.com). This shows that there will be increased number of customers who will use Flydubai airlines within the next three years due its successful use of pricing strategy and flexibility.

The Employees of Flydubai have good experiences and they were carefully selected from twelve different nationalities. According to Kenneth Gile, chief operating officer of Flydubai said: “We are extremely pleased with the talent of the pilots we have on board. On average, they each have more than 4,000 hours serving as captain in similar aircraft and a total experience of more than 8,000 flying hours – this is impressive by any standard” (Sambidge, 2009).

Flydubai is fully owned by the government of Dubai and its considered as a part of its mother company the Emirates Group.

The main strategy that Flydubai is willing to use for their marketing strategy is through word of mouth (buzz). This is because Flydubai is a low cost airline; they tend to set low budgets for their advertisements to keep their prices low.

The direct competitors of Flydubai are Air Arabia and Al Jazeerah airlines because these two airlines are also low cost airlines in the same country as Flydubai. However, the major competitor of Flydubai is Air Arabia because, first of all, they are the first to claim about low cost airlines in the Middle East region. Moreover, they hold the highest market share in the relevant market as identified before. Our market share comparing to those two carries are low because Flydubai just recently launched to the market. But, within the next three years we expect rapid growth in the market share because Dubai is a destination for tourists. The major indirect competitor is Fly Emirates which stands as the leader in airline industry in the relevant market and it will keep its performance in the next three years. The second indirect competitor is Etihad Airlines which is growing fast because of the unlimited support from Abu Dhabi government. In addition, those airline carriers make low price offers for the same destination that we have flight lines to.

The supplier of Flydubai is Boeing. Flydubai announced an order of 50 next generation 737 aircraft from Boeing. Sheikh Ahmed bin Saeed al Maktoum said: “The Boeing Next-Generation 737 is ideally suited to our mission to bring some two billion regional inhabitants affordable, efficient and flexible travel options to and from Dubai.”(For more information on the micro environment analysis, please refer to Appendix 4).

Implications:
Primary demand:

Low cost airlines are focusing on customers who are price conscious. The number of customers using the LCC airlines is increasing and it will continue growing in the next three years (www.gulf-daily-news.com). This is because, first of all, the percentage of tourists will increase by 40% within the next three years which shows that the market share of LCC will increase as well. Secondly, because of the economic condition, many people tend to save money and spend it on low cost airlines to travel more to the desired destinations. Users of Low cost airlines contain all different ages and nationalities. Moreover, cost is one of the main factors that affect customer’s ability to buy. The costs of these carriers are low and will continue to remain low in the next three years. This will increase customer’s ability and willingness to buy.

Selective demand

We can define the consumer decision making process as an extensive problem solving level, where they are introduced to a complete new brand with low brand knowledge. So, Flydubai should infusive more on their brand identity through the media and other communication types in order to enrich consumer’s knowledge. Once Flydubai had increased the level of consumer knowledge, we expect huge increase in market share in the next three years because the decision making process is going to shift from extensive problem solving to routine which is low information search about the company. Therefore, we expect major change within the next three year upon the factors we mentioned above.

Segmentation:

As for segmentation we expect to see a rise in the population of the UAE in the following 3 years. According to the electronic portal of Gulf News the population of UAE is approaching six million as of now and it is expected to escalate even further by the end of this year. An increase in construction in the coming years requires more labor to be imported from foreign countries, thus increasing the number of potential customers (low income and middle-class lifestyles) who might want to use our services. Moreover, economic boom can also be a factor for businessmen to travel to and from Dubai more frequently. In addition, the number of students travelling to the UAE for education is expected to increase in the near future; this implies that they will most probably select Flydubai as their primary mode of transport to travel to and from the UAE, since the economic condition shows very little signs of improvement in the near future.

More tourists are expected to arrive in the UAE within the near future out of which a section of them are extremely price sensitive travelers.

Another scenario would be that the current economic downturn continues to effect economies world-wide within the coming three years increasing the number of price-sensitive customers in the eight markets we operate in.

To keep up with the projected demand, Flydubai is planning to increase its fleet size from 5 (currently) to 54 aircrafts in the coming years. An increase in fleet size would allow Flydubai not only to accommodate a large number of clients but also expand its reach in terms of destinations.

Conversely, the announcement of the new GCC rail network which is the new transportation class in our relevant market is expected to have a slight negative effect on Flydubai’s operations in terms of loosing clients that fall in our target segmentation. The GCC rail network and Flydubai have one common destination which is Qatar. Once the GCC rail network begins its operations there is a high possibility of losing out on our current and potential clients. (For more information on segmentation please refer to appendix 5).

Competitor analysis

Our major competitive in our relative market is Air Arabia and then Al Jazeera Airlines. Air Arabia is holding major market share because they are the first to claim about launching first low cost airlines in Middle East region. However, Flydubai can compete with those two direct competitors when we focus on our competitive advantage which is price leadership. Also, location is another important factor due the number of travelers that are using Dubai Airport comparing to Sharjah Airport. In addition, being part of the Emirates Group will add more value to Flydubai brand equity which will make it easier to make customers shift toward our company within the next three years. (For more information on competitor analysis, please refer to Appendix 6)

Conclusion:

In conclusion after analyzing the environmental micro and macro trend for Flydubai, we observed that there are two major changes in our relevant market. First, the increase of the tourism level in Dubai as we expect the current economic downturn era to change its direction towards positive figures in the next three years. Also, the companies’ holders and businessmen attitude towards low cost airlines is changing by using it as these airlines are providing business men services aboard such a business class and wireless internet connection. The number of competitors within the low cost airline industry is going to increase in the coming years as new airlines such as Bahrain Airlines starts its operation this year. Secondly, full service airlines are expanding their market towards low cost airline by introducing low price tickets that attract price sensitive consumers. We expect that within the next ten years a new class level will enter the market in the GCC region which is trains transportation. Also, a new form level will emerge in the relevant market which is a combination between full services and low cost carriers. Finally, within the next three years we expect those changes in the relevant market to be reshaped affecting the primary and selective demand.

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(2009, October 8). Number of tourists in Dubai set to grow by 40 per cent . Retrieved from http://74.125.153.132/search?q=cache:EPQhPUeolAEJ:www.realtyna.com/dubai_real_estate/dubai-rss-news/number-of-tourists-in-dubai-set-to-grow-by-40-per-cent.html+http://www.realtyna.com/dubai_real_estate/dubai-rss-news/number-of-tourists-in-dubai-set-to-grow-by-40-per-cent.html&cd=1&hl=ar&ct=clnk&gl=ae

Sambidge, Initials. (2009, March 18). flydubai appoints pilots, cabin crew. Retrieved from http://www.arabianbusiness.com/549994-Flydubai-appoints-pilots-cabin-crew

Sambidge, A. (2009, August 11). Dubai tourists up 5% in H1 – official. Retrieved from http://www.arabianbusiness.com/564508-dubai-tourists-up-5-in-h1—official

(2009, 10 07). UAE population. Retrieved from http://archive.gulfnews.com/articles/09/10/07/10355378.html

Redpath, H. (2009, June 16). Dubai’s First Low Cost Airline Takes Off. Retrieved from http://multivu.prnewswire.com/mnr/Flydubai/38830/

Redpath, H. (2009, June 16). Dubai’s First Low Cost Airline Takes Off. Retrieved from http://www.zawya.com/story.cfm/sidZAWYA20090616081711

Appendix 1
Back Ground information on Flydubai:

Flydubai is the UAE second low cost airline that was established in March ,3rd 2008 on the orders of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai. The company first flight was in June 1,2009 to Beirut in Lebanon followed by flights to Amman, Jordan, on June 2, Damascus, Syria, on June 8 and Alexandria, Egypt, on June 9, giving the new airline a total of four destinations in just nine days. (Redpath, 2009).

The company had ordered 50 Boeing 737 and is going to receive 10 airplanes each year for the next five years. (Flydubai,2009) Currently the company runs its operations in Dubai International Airport terminal 2 that was redesigned for the new airline.

Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of Flydubai said: “This region is very dependent on air transport. It is a great credit to the vision and leadership of Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, that this airline has now taken off, thereby ensuring residents and visitors alike will be able to travel to more places more often.” (Redpath, 2009).

The Flydubai model is simple, with customers only paying for the services they want. The ticket price includes all taxes and one piece of hand baggage, weighing up to 10kg, per passenger. Passengers have the option to purchase checked-in baggage in advance at just 40AED for the first piece and 100AED for the second, weighing up to 32kgs, subject to availability. Checked baggage is strictly subject to availability and passengers are advised to book early to secure the space, as only pre-purchased baggage can be guaranteed. (Redpath, 2009)

“Flydubai aims to make travel a little less complex, a little less stressful and a little less expensive,” explained Flydubai CEO Ghaith Al Ghaith. “Our passengers have the option to customize their travel experience depending on what services they want and how much they want to pay. (Redpath, 2009)

“We plan to stimulate the markets in which we operate and encourage people to travel to more places more often. Flydubai aim is not to drive traffic away from the other carriers but to help grow these markets. When you consider that low cost travel in this region could be as little as 2% of all air travel, as opposed to more than 20% in Europe and America, it is clear that there is a lot of untapped potential in these markets. (Redpath, 2009)

“In addition, Flydubai will fly to airports that are currently underserved by the traditional carriers. In a region which is so dependent on air transport, we are looking forward to providing the reality of accessible, low cost, uncomplicated travel” (Redpath, 2009).

Appendix 2:
Product Market Structure:

The above market structure was used to identify Flydubai relevant market within the airline industry in the Middle East region. We started the structure with the most basic need which is the need to travel in the region. This provided us with three alternatives that include airplanes, buses and cars. The product form is divided between full service carriers and low cost carriers as they differentiate in prices and services being offered to customers. From this structure we can identify Flydubai relevant market within the product form level. This is because the degree of competition and substitutability within the brand suppliers are high, as they all offer low prices with similar routes within the region. This push the relevant market upwards towards the product form level. Furthermore, Flydubai indirect competitors include Fly Emirates, Etihad airlines and Saudi airlines. These full service airlines are competing with Flydubai indirectly by providing low prices with full services. On the other hand our direct competitors include Air Arabia and Al Jazerra airlines that are both low cost airlines that perform within the region. Further explanation on competition will be provided in the Micro analysis in the competitors section.

Appendix 3
Macro Environment:

In studying the external environment of Flydubai in the next three years we will focus on the Macro and Micro environment. This study will help us in finding out the effect of these external factors on the company in the next few years.

The Macro environment factors will include Political, economical, social and technological aspects under which Flydubai will be affected by.

1) Political Analysis:
A) Government Regulations:

Flydubai was established with orders of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai. Being owned by the Dubai government the company faces no difficulties in laws and regulations as the airline industry in the Emirates is booming through the process of liberalization the airline industry that the United Arab Emirates is adapting.

B) Political Analysis:

In studying the overall political environment of the United Arab Emirates, we find it one of the most stable countries within the region. Such political approach of peace seeking had made the country a trading hub in the region. This will certainly have its positive effect on flydubai operations as to perform in stable political environment.

C) Employment Laws:

Protecting labors rights and Emiratization is considered the main aspect that the UAE government is taking into consideration now a days. Companies are now forced to have a certain percentage that of emirates locals that will increase in the following years as there is more emphasis on employing locals in the private sector. Being a part of Emirates Airlines Group, Flydubai will certainly adapt its mother company in hiring and training locals in suitable jobs. The challenge that Flydubai will going to face is to decrease costs in one hand and provide well paid jobs in the same time .

2) Economical Analysis:
A) Inflation Rate:

“The inflation rate in the UAE is predicted to fall from last year’s 11.1 percent level to seven percent in 2010, according to a new report.” (Sambidge, 2009). This is considered a positive aspect for Flydubai as it will have its positive effects in reducing the company costs in oil and ground operations. High inflation rates reaching to 11 percent last year was a threat to low cost airlines such as Air Arabia and Al Jazerra Airlines that faced a problem of high oil prices. This good news will make Flydubai compete even stronger on prices as inflation rates goes down.

B) Economical Analysis:

“Falling oil prices, cooling real estate and construction markets, together with a slowdown in the tourism sector, especially in Dubai, means the UAE is expected to post low or possibly negative GDP growth in 2009, according to analysts. (Sambidge, 2009). Living in the current World Financial Economic Crises the UAE economy in general and Dubai in specific faced a hard time in 2009 but analysts forecast that there will be more positive figures in 2010. This information is considered a negative too many airline companies but may be positive to Flydubai as people are now more focus in reducing their expenses as the incomes are reduced. This means their tendency of consumers focusing more on prices which is a positive thing for a low cost airline. Additionally, analysts forecast that the economy will grow in 2010 again and this will certainly have its effect on the company growth.

3) Social Analysis:
A) Demographics:

More than 300,000 people will be added to the UAE population this year to record the highest growth of 6.3 per cent in five years and Dubai would likely emerge as the fastest growing emirate, official figures show. The rise rebuffs reports that the global financial turbulence has triggered a mass exodus of expatriates out of the country, mainly Dubai.

From 4.75 million in mid 2008, the UAE’s population is projected to increase to 5.066 million in mid 2009, showed the figures by the Ministry of Economy. This figure are going to increase in the next few years which will certainly have its positive effects on the airline industry in UAE considering that expatriates make an approximate percentage of 80.1 of the above figure in 2009 according to the ministry of economy.

Furthermore, the figures show that the 25-29 year age group was the largest in the UAE in mid 2008, standing at 777,186. It was followed by the 30-34 age groups, which was estimated at 754,289 and 35-39 groups of 588,505. This clearly indicates that most of the population is young and is going to shape the tourism and aviation market in the next couple of years.

B) Consumer Behavior:

According to a study done by Arabian Business website, it was found that 83 percent of the respondents would switch their preferred airline carrier, for a cheaper price, while 17.6 percent believed they would consider alternatives and trade off between the discount and lost air miles. It can thus be inferred that pricing plays a significant role in consumer behaviour and the decision making process especially in the current economic downturn era. Furthermore, customer loyalty in the low cost carriers is low as it’s directly related to price. Flydubai should consider this into account and introduce customer loyalty programs in order to maintain a higher level of customer loyalty. (Glass, 2008).

C) Leisure Interests:

” 3.85 million tourists had visited the emirate in the first half of 2009, a five percent increase on the same period of 2008? According to Dubai department of Tourism and commerce marketing . This figure strongly shows the current tourism industry market and how attractive it became even though of the current economical downturn. Other figures expect that the number of tourists will fall compared to 2008 figures but most figures have stated that there will be a positive growth in 2010.

D) Career Attitude:

Business travelers are changing their perception of low cost carriers. As observed by Andrew Cowen, CEO of Same, the market is shifting from the traditional major airlines business travel towards low cost carriers for trips within the GCC. This changing attitude, supported by the current economic downturn and the increase number of foreign businesses within GCC countries entering the UAE, shows a trend of an increasing demand for low cost carriers in the next three years. (High time for low cost carriers, 2008).

E) Technological Development Analysis:

Following its mother company Emirates Airlines, we expect that Flydubai become a market leader in providing advanced technological solutions to its passengers by using the large experience that emirates airline have. If such direction was adapted, it will certainly provide the needed strength that Flydubai need in competing with its direct and indirect competitors.

Appendix 4
Micro Environment:
Stakeholder Analysis:

This means to analyze the micro environment which includes the following factors: the customers, employees, shareholders, media, and the competitors.

A) Customers:

Customers who are price conscious are concerned with low cost airlines. Flydubai has focused on pricing strategy and flexibility because these two factors play a big role in determining the customer’s decision process on which airlines they choose to travel with. Price strategy and flexibility of Flydubai include low pricing strategy and easy booking with increased choices. As Sheikh Ahmed bin Saeed Al-Maktoum, Chairman of Flydubai said: “As a true low cost airline we are geared towards providing our passengers with the best price and increased choice. We will operate efficiently and continually evolve to deliver the best possible product to our customers”. (“Flydubai opens for,” 2009). The cost of Flydubai from Dubai airport to Doha airport would cost 200DHS, whereas other major airlines such as; Emirates or Qatar airlines would cost approximately 1000 or more for a one way ticket (“Flydubai home page,” 2009). This shows that Flydubai is much cheaper and has managed to keep prices low due to the successful use of their pricing strategy.

Moreover, the number of tourist from around the world including the region will grow more than 40% in the next 3 years in Dubai (“Number of tourists,” 2009) .This shows that there will be increased number of customers who will use Flydubai airlines within the next three years due its successful use of pricing strategy and flexibility.

B) Employees:

Flydubai airline has received more than 11,500 applications from flight and cabin crew. There are 18 first officers, 61 captains, and almost more than 8000 candidates for pilots were selected from twelve different nationalities (Sambidge, 2009). The staff has good experiences and was carefully selected. According to Kenneth Gile, chief operating officer of Flydubai said: “We are extremely pleased with the talent of the pilots we have on board. On average, they each have more than 4,000 hours serving as captain in similar aircraft and a total experience of more than 8,000 flying hours – this is impressive by any standard” (Sambidge, 2009). Furthermore, employee and staff hospitality is very important. This is because the employees and staff were selected from twelve different nationalities and they need to feel comfortable with the new culture they are facing in order to work efficiently.

D) Shareholders:

Flydubai is fully owned by the government of Dubai and its considered as a part of its mother company the Emirates Group. The company has no other shareholders currently as there its 250 million dirham’s capital is completely raised by the government.

E) The media:

Obviously, through observations, Flydubai has made many advertisements through publicity such as; Newspapers (e.g. gulf news) and internet websites. However, the main strategy they used or willing to use for their marketing strategy is through word of mouth (buzz). Since Flydubai is a low cost airline, they tend to set low budgets for their advertisements to keep their prices low. So the best way to conduct an advertisement method for low cost carriers is through word of mouth. (This information is based on analysis due to facts and observations).

Appendix 5
Primary demand:

After making the environment analysis for the next three years and studying the current market conditions, we identified Flydubai relevant market at the product form level. This is because there is a high competition within the brand supply level forcing it towards the product form level as they all offer low prices with similar destinations. After the financial crisis, we noticed a shift toward low cost airlines as incomes had decreased. This had its effects on the following primary demand elements that include:

Buyer Identification:

The number of customers using the LCC airlines is recently increasing (www.gulf-daily-news.com). Users of LCC