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Carnival Cruise Lines is a global cruise company and one of the largest vacation companies in the world. CCL generates all of its revenues from the cruise industry. The company’s wide-ranging product offerings provide guests with exceptional vacation experiences at an outstanding value. The success in providing quality cruise vacations has made CCL the most profitable company in the leisure travel industry. Carnival Cruise Line’s stock is dually listed on both the New York Stock Exchange and on the London Stock Exchange under symbol CCL. It is the only company in the world to be included in both the S&P 500 index in the United States and the FTSE 100 index in the United Kingdom (Carnival Corporation & PLC, 2012).

Carnival Cruise Lines operates a fleet of 100 ships, with another seven ships scheduled for delivery between now and March 2016. With approximately 200,000 guests and 77,000 shipboard employees, there are more than 277,000 people sailing aboard CCL’s fleet at any given time (Carnival Corporation & PLC, 2012).

For the purpose of our report it is crucial to understand how the Carnival Cruise Lines Corporation works today. We need to understand how the various aspects of the business are set up and how they work together. Only after a true understanding of the current situation, we can come with proposals for improvement and indicate the impact on current ways of working.

In literature one can fine many models that can be used to look at an organization with an internal perspective. In appendix X we provide an overview of some management models we have found in literature, with an explanation why, when and how it should be used. Since our report needs to cover the implementation of a new IT management strategy, we have decided to use McKinsey’s 7S model as shown in figure X. This model, developed in the 1980’s, involves 7 factors, which can be categorized as hard and soft elements. Hard elements can be identified and influenced more easily. They would be driven by the organization charts and reporting lines within the business and they may include the systems you use to get work done. Soft elements are, by their very nature, more difficult to manage and may be affected by the culture of the organization. But you have to apply yourself to these as much as the hard elements, as they provide the support structure for the successful implementation of any change, and they are all interdependent on each other.

Figure 7S framework (McKinsey)

The hard elements in the 7S-model are Strategy, Structure and Systems; the soft elements are Style, Shared Values, Skills and Staff. In order to understand the 7S-model better a brief explanation is given below.

Hard elements of the 7S-model:

Strategy – by using mission and vision the organization’s objectives become clear.

Structure – how is the organization structured and which hierarchical layers are there

Systems – all formal and informal methods of operation, procedures and communication flows

Soft elements of the 7S-model:

Style – this is about leadership and management styles

Shared values – the standards and values and other forms of ethics within an organization in which vision, corporate culture and identity are the key elements

Skills – these concern both the skills of the organization and those of the employees

Staff – this is about the employees, their competences and job descriptions

In addition to the above elements we added two paragraphs specifically on Information Management and Risk Management to give a complete overview of the situation of Carnival Cruise Lines today.

2.1 Strategy of CCL

The mission of Carnival Cruise Lines is to take the world on vacation and deliver exceptional experiences through many of the world’s best-known cruise brands that cater to a variety of different geographic regions and lifestyles, all at an outstanding value unrivaled on land or at sea (Carnival Corporation & PLC, 2012).

The vision statement of CCL is the following: to consistently deliver fun, memorable vacations at a repeat value (Carnival Corporation & PLC, 2012).

Derived from this mission and vision, Carnival Cruise Lines has set up the following strategic objectives:

to be the leading cruise operator in all segments entered and to maintain the most up-to-date fleet of cruise ships in the world

to develop new cruise segments and innovative cruise packages to reach a larger number of potential and past cruisers

employ sophisticated promotional efforts to achieve a greater awareness by the public concerning the availability and afford ability of cruise travel

attract the first-time and younger cruisers (Carnival), experienced cruisers (Holland America), upscale cruisers(Seaborne), and cruisers wanting a sailing vacation (Windstar)

promote cruises as an alternative to land-based vacations

provide a variety of activities as well as ports of call

be innovative in all respects of operations of the ship.

All initiatives that are taken by Carnival Cruise Lines need to be in line with the mission, vision and strategic objectives (Carnival Corporation & PLC, 2012).

With regard to the strategy of Carnival Cruise Lines the following strengths can be identified:

Strengths
Weaknesses

Dominant market share

Strong acquisition strategy

Comprehensive portfolio (target groups)

Strength
Dominant market share

The biggest strength of Carnival Cruise Lines is its huge scale and scope. The company is twice as large as its biggest competitor and competes in nearly every market and segment worldwide (Appendix X). This gives CCL enormous power over the cruise industry as a whole. It enables the company to undertake projects that grow the industry, gives it a platform for continued mergers and acquisitions activity, and helps CCL negotiate with major manufacturers of cruise ships (Levin, Jones, & Slade, 2011). In all initiatives and projects that are undertaken by the company, the incentive is always to keep that dominant market share and even to grow it further. CCL wants to be a leader, and this will be reflected in management decisions.

Strength
Strong acquisition strategy

Carnival Cruise Lines has the ability to obtain companies through acquisitions. By using an acquisition strategy, the Corporation has been able to position itself in each geographical market in the world and rank itself as number one in the cruising sector. However, this strength also results in a highly decentralized IT landscape, as described in paragraph 2.8.

Strength
Comprehensive portfolio (target groups)

The corporation has a large fleet capacity and operates ten of the most recognizable cruise brand names. CCL’s portfolio of brand names appeals to almost every niche market, from budget minded, contemporary to luxury cruises (Marketingteacher, 2012). Each cruise line operates globally and is targeted at one or more nationalities (Appendix X). This is linked to the fact that CCL wants to be the leader in the cruising industry and wants to keep the dominant market share.

2.2 Structure of CCL

Carnival Cruise Lines Corporation & plc has two main headquarters, Carnival Place in the US and Carnival House in the UK. The constituent Corporation and plc are separate listed companies with different shareholder bodies, but they jointly own all the operating companies in the group. Both headquarters have their own management team, strategy, and IT organization. Within Carnival Cruise Lines every brand is seen as a separate business unit, with its own profit and loss statement.

With regard to the structure of Carnival Cruise Lines the following strengths and weaknesses can be identified:

Strengths
Weaknesses

Strong financial position

Clear focus on cost leadership

Strong marketing

Decentralization of business operations

Decreasing profit

Over-dependence on US market

Strength
Strong financial position

Carnival Cruise Lines is one of the most profitable cruising companies. The company’s average net income (FY2005 to FY2009) amounted to 18.1% compared to the industry standard of 6.3% (Marketingteacher, 2012). The firm is dual listed on the New York Stock Exchange and the London Stock Exchange under the symbol CCL. Since the company is dual listed, it has the ability to raise more funds from investor than its competitors. With this also comes greater stability due to different markets being affected by different economic occurrences, political issues, and society’s views (Levin, Jones, & Slade, 2011). Due to the strong financial position, CCL has a certain luxury to take strategic important and cutting edge decisions and, at the same time, invest the necessary funds to make it possible.

Strength
Clear focus on cost leadership

Carnival Cruise Lines has a clear focus on Cost Leadership, i.e. CCL offers its product to the mass market. Therefore the highest focus is put on the price and keeping the price as low as possible. Once the customer is on board the ship, additional revenue is created by having the customer pay for everything that was not covered in the base price. CCL is such a large company that it has significant cost advantages over most of its competitors. Unlike Royal Caribbean where the focus is on delivering the best customer experience (Appendix X, interview Vicki Freed), the focus at CCL is more on providing the best cruise for the lowest amount. Additional revenues are generated once a customer is onboard.

Strength
Strong marketing

Carnival Cruise Lines invests explicitly and effectively in print and television media. Their promotions target the lifestyles of each group of customers (Marketingteacher, 2012). This strategy enables CCL to get name recognition in every market segment, hence the different cruise lines under the brand.

Weakness
Decentralization of business operations

Historically, CCL has been run by the Arison family as a coalition of largely independent businesses. Each cruise line largely manages its own customers, marketing, distribution, sales, ports, and logistics. This approach has had benefits: internal competition means that each line operates better than any would in isolation. The yearly capital planning process happens on both the US side as on the UK side, which might lead to duplication of effort. The business operations of the cruise lines are not centrally managed. Better coordination of these business operations could generate additional benefits for Carnival Cruise Lines (Levin, Jones, & Slade, 2011).

Figure Organization chart Carnival Cruise Lines

Figure X gives the high-level organization chart of CCL. On the left hand side all the 10 brands with their presidents are listed, with a direct line to Mickey Arison. As stated above, although there is a direct reporting line to Mickey Arison, every brand is managed as a business unit with its own profit and loss. On right hand side all the supporting functions, such as HR, legal, IT,aˆ¦ are listed with their CxO or head of department. These departments have a direct reporting line to Mickey Arison as well, but in every business unit there is an own representation of each supporting function with a reporting line to the president of the brand. The communication between the business unit representation and the CxO of the supporting function is not always seamless, which can lead to duplication of effort.

Weakness
Decreasing profit

The profit of CCL has diminished over the last years. The net profit was $1,790 million in FY2009, a decrease of 23.2% as compared to 2008. The profit recovered some in 2010 and 2011 but never reached the level of 2008 (see appendix X) Another weakness is that Carnival Cruise lines reports their financial statements in dollars. About half of their revenue is generated in a non-US currency, but is reported in terms of US dollars. The value of the dollar against Euro appreciated from 1.60 in January 2010 to 1.53 by April 2010 against the Pound. If the dollar strengthens it would record a lower revenue than is actually earned (Marketingteacher, 2012). The pressure on profit will keep on adding pressure on taking the right management decisions and investing in the right opportunities.

Weakness
Over-dependence on US market

Carnival Cruise Lines derives a majority of its revenue (nearly 52%) from US customers. In 2009 the revenue from the North American market registered a double digit decline. The over-dependence on the US market makes CCL vulnerable to the economic fluctuations of the American economy and this company is dependent on customers’ disposable income (Marketingteacher, 2012). All cruise companies, CCL as well, are moving their focus from the US market to Europe and Asia. Especially in Asia there is a huge growth potential.

2.3 Systems within CCL

This paragraph gives a high level overview of systems as mentioned in the 7S model: all formal and informal methods of operation, procedures and communication flows. In paragraph 2.8 we focus on Information Technology systems and the current IT landscape.

With regard to the systems of Carnival Cruise Lines the following strengths and weaknesses can be identified:

Strengths
Weaknesses

IT incorporated in company results

No prioritization process in place

No benefits tracking

No integrated CRM process

Strength
IT incorporated in company results

In some companies IT is considered as free of charge, since IT is not incorporated in the company results. This leads to a distorted view of company/business unit results. However, Carnival Cruise Lines incorporates the costs of IT in the company/business unit results, which allows both the company/business unit itself to get a more realistic view of the results, but also the market gets a more trustworthy view of the results. This leads to a more positive ranking in the market.

Weakness
No prioritization process in place

Since every business unit is set up as an own profit and loss center, every business unit deems their own project to be the most important. Currently, there is no prioritization process in place on the business side, which leads to a continuous flow of projects that need IT resources.

Weakness
No benefits tracking

Many projects get kicked off and promise benefits. However there is no process in place to measure these benefits after the project has been delivered. This allows the business to keep on creating additional projects to deliver the same thing, again allowing business increase costs instead of reducing costs.

Weakness
No integrated CRM process

Carnival Cruise Lines does not have an integrated CRM process in place for the whole corporation. This leads to the fact that customers from the one cruise line aren’t recognized as a repeat customer with a different cruise line within the group, this has an immediate effect on the pricing for repeat customers. Also, due to the lack of this process, the organization cannot target specific customers groups, based on their previous behavior on the cruise, since that information is only fragmented available.

2.4 Style within CCL

The leadership style at Carnival Cruise Lines can be called family-like. This family-like leadership style is a management style that Ted Arison already used when he was still steering the company. Ted Arison had a non-hierarchical approach to management, meaning that he delegated a lot of work downwards in the organization, allowing him to oversee the bigger picture (Managementparadise, 2012).

With regard to the style of Carnival Cruise Lines the following strength can be identified:

Strengths
Weaknesses

Leadership style empowering people

Strength
Leadership style empowering people

People with the right skills are hired and are giving the support and room to do their jobs correctly. People are encouraged to be hands-on and take calculated risks. Taking risks also means that mistakes can occur, however CCL uses a no blame culture through which people feel empowered (Managementparadise, 2012).

2.5 Shared values of CCL

Derived from the mission and vision of Carnival Cruise Lines (see 2.1) the company has set some company values that were a high priority. With regard to the shared values of CCL the following strengths can be identified:

Strengths
Weaknesses

Strong company values

Focus on the environment

Strength
Strong company values

The company values are: honesty, integrity, fairness, hospitality and teamwork. The values are deemed important to do their job in a correct manner.

Strength
Focus on the environment

Carnival Cruise Lines, as all other cruise lines in the industry, takes much pride in the focus they put on the environment. They invest heavily in health and safety, both for customers and for employees. There is a very strong focus on the environment and to work in a greener way. Charity is also one of the key components of their social responsibility strategy.

2.6 Skills at CCL

Working in the leisure industry requires some specific skills that you cannot always learn. Most important skills that someone working in the leisure industry would need, are the following: customer focused, empathy, team work, stress resistant, multi-cultural, service orientation and multi linguistic.

With regard to the skills of Carnival Cruise Lines the following strengths can be identified:

Strengths
Weaknesses

Strong attention for skills & attitude

Loyalty programs in place

Strength
Strong attention for skills & attitude

Since Carnival Cruise Lines wants to be seen as the cruise line that delivers fun, the attitude of the employees is very important as well. The employees need to be cheerful and enthusiastic. CCL puts great effort in stimulating the desired skills and attitude of the employees.

Strength
Loyalty programs in place

CCL has its loyalty programs in place. The company introduced a new loyalty program in 2012 providing past guests with a variety of value-added benefits and features, including priority embarkation and debarkation, guaranteed supper club reservations and dining times, personalized stationery and custom-designed CCL logo items (Carnival, 2012). Contrary to what is stated in the business case, Carnival Cruise Lines has now its loyalty programs in place.

2.7 Staff at CCL

Cruise ships typically operate with three classes of crew. The first is the officers: these professionals are highly paid and given ultimate command of the ship. The second is entertainers and wait staff: typically lower-paid, but from the same countries as the cruisers that they serve. Finally, most of the ships’ crew is drawn from developing countries. While pay is low, the salary can represent an attractive opportunity for these workers, who often work 10-month contracts without being able to see their homes and families. Turnover is high, and few of the crew sees working on a cruise ship as a viable long-term career. Staff remains 24/7 on board of the ship, have their own cabins at the lowest two decks of the ship. Only officers are allowed to mix between guests, this at special occasions and in formal attire. Other crew members have dedicated times during which they can be present on guest decks.

With regard to the staff of Carnival Cruise Lines the following strengths can be identified:

Strengths
Weaknesses

Operational excellence & experience

Talent development programs in place

Strength
Operational excellence & experience

Carnival Cruise Lines has achieved below-industry-average costs and above-average revenue historically. This is largely due to the company’s immense experience in owning and operating cruises, as well as some smart strategic plays. That advantage makes expanding into new markets vastly easier for CCL than for a smaller player or upstart firm.

CCL has the largest pool of data to draw on to determine what does and does not work and has the most experienced marketers of cruises in the world. These ‘soft’ advantages let CCL potentially segment its customers more efficiently than competitors (Levin, Jones, & Slade, 2011).

Strength
Talent development programs in place

CCL has a separate training and development department set up in the organization. The corporation invests heavily in coaching of high potentials by giving them learning opportunities that are fit for their personal needs.

2.8 Information Management

The current IT landscape of CCL is much diversified. First of all, the IT landscape is split in the shore side systems and the shipboard systems. This split between on shore and shipboard adds a dimension to the complexity of the landscape, since most of the shipboard systems need to be able to communicate to the shore side systems. An additional challenge in the current IT landscape is the use of legacy systems. Since there are basically only three main competitors in the cruise industry, there is not really a vendor that specializes in ‘cruise industry systems’, hence all the cruise companies use their own developed systems. Years ago, this was not really a problem, but nowadays with the globalization of industries, limitations of these legacy systems refrain CCL to be as agile as they would like to be. Figure X gives a high level overview of the current IT landscape within Carnival Cruise Lines at the time of the case description One can assume that due to acquisitions between 2006 and 2012 this landscape has grown in complexity even more. Another type of systems now in the current landscape which were not described in the case are the risk management and internal control systems. For this CCL uses IBM ‘OpenPages Financial Controls Management’ and ‘IBM OpenPages Operational Risk Management’ (IBM Corporation, 2011).

Figure Information systems within CCL

With regard to Information Management the following strength and weaknesses can be identified:

Strengths
Weaknesses

Excellent booking system for travel agents

Decentralized systems

Legacy systems

No overview of project portfolio

Weak resource management

TCO for IT not in place

Outsourcing level 2 & 3 support difficult

Strength
Excellent booking system for travel agents

From a travel agent’s perspective CCL is easy to do business with: ‘travel agents will say that Carnival is much easier to work with than Royal ‘ (Appendix X, interview Vicky Freed).

Carnival Cruise Lines has upgraded the booking engine within its travel agent web portal, to help agents save time when booking reservations online. A streamlined and simplified process for managing bookings, as well as an interactive toolbar that provides easier navigation between different components of the booking engine, make it easier for agents to book cruises for their clients. In addition to an entirely new design and navigation, the upgraded booking engine offers convenient links to several applications (Travel Agent Central, 2012). ‘The updated booking engine is designed to reflect the changing business models of travel agents and represents the latest enhancement to this comprehensive portal which serves as a one-stop-shop for travel agents to fulfill all of their sales and marketing needs’ (Lynn Torrent, senior vice president of sales and guest services CCL).

Weakness
Decentralized systems

The decentralization within Carnival Cruise Lines translates into a decentralization of systems as well. Decisions aren’t always communicated from one cruise line to the other, which leads to duplication of effort. This decentralization of the business organization translates to the IT organization as well. Every brand has its own IT department with own systems and infrastructure.

Weakness
Legacy systems

There are many legacy systems. Since there aren’t many players in the cruising sector, most of the strategic important applications are custom made. This leads to a spaghetti landscape in which integration is very difficult and which affects the time to market significantly.

Weakness
No overview of project portfolio

Projects can start within a business unit or on a corporate level within CCL. Since the business is set up in separate business units, with their own IT departments, there is a lot of duplication of effort. There in not one global IT Program Management Office that oversees all the current projects and their requirements for IT. This has both an impact on the IT resource management as on the IT landscape that runs the risk to get even more diversified.

Weakness
Weak resource management

Due to the lack of a prioritization process for projects, the first-in-first-out principle is often used, this means that resources get allocated either to the project that came in the pipeline first or either to the project that has a business owner or project manager who is very persuasive. Without the prioritization process in place, it is very difficult for the IT management to decide where to allocate resources to. The lack of prioritization leads to frustration on the business side, because there is the perception that IT is not able to deliver in time.

Weakness
TCO for IT not in place

To really understand the total cost of IT for the business all costs of IT should be made transparent and understandable for any business owner. Currently CCL has no total cost of ownership for IT in place. Reasons for not having TCO for IT in place are miscellaneous; it is very difficult to really get cost like network transparent, an IT service catalogue needs to be in place, IT management needs to be committed,aˆ¦ However implementing TCO for IT will help the IT management get the multitude of costs as a result of duplication of effort visible to the business.

Weakness
Outsourcing level 2 & 3 support difficult

As already stated above, most of the applications of CCL are custom made. This in-house development induces resources with a very specific knowledge. Often, this knowledge is both on the system side as on the business process side and therefore confidential. Outsourcing level 2 and 3 support is very difficult, due to these specific knowledge.

2.9 Risk Management

Enterprise Risk Management is a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives (COSO, 2004). Organizations which manage risk effectively and efficiently are more likely to achieve their goals and to achieve this at a lower overall cost. Risk management is therefore good management. Risk management should be a multi-faceted discipline: often referred to as enterprise, integrated, holistic or practical risk management (The Institute of Risk Management, 2012). The objective of a risk management framework is to help ensure that appropriate technical and administrative controls are identified and implemented to protect information resources and help ensure continuity of business operations (Hillson, 2006).

With regard to Risk Management the following strengths and weaknesses can be identified for CCL:

Strengths
Weaknesses

Enterprise Risk Management in place

Good frameworks

Strong focus on security & privacy regulations

Poor safety record

Strength
Enterprise Risk Management in place

Carnival Cruise Lines has introduced the Enterprise Risk Management (ERM) program. This program is designed to identify, assess, manage and report the most significant business and strategic risks faced by the company to senior management and the Board of Directors. The ERM program is overseen by a team within the Corporate Risk Advisory & Assurance Services Department, based in the Miami headquarters. CCL also maintains onsite teams at each of its brands, in order to stay aligned with the corporation’s generally decentralized management structure and to develop on-site audit expertise at each of the major brands. (IBM Corporation, 2011).

Within CCL’s business units risk management and internal control is an ongoing process. It is designed to identify, evaluate and manage the significant risks faced by the units and is embedded in each of the operations. A system of internal controls has been established to be capable of responding quickly to evolving risks in the business. It includes procedures for the direct reporting of material internal control deficiencies together with the appropriate corrective action. The corporate executive management team receives periodic information regarding internal control issues arising at the business units. The primary focus of this aspect of the system is the corporate Management Advisory Services (MAS) Department. MAS is responsible for monitoring the process, ensuring that issues common to more than one business unit are identified and that all relevant matters are brought to the attention of the boards as a whole. The MAS Department is supported by the Corporate Finance and Corporate Legal Departments, as well as the CEO, COO and the CFO (CCL, 2010).

Strength
Good frameworks

CCL has adopted the Committee of Sponsoring Organizations of the Treadway Commission (COSO) guidance for implementing its internal control framework as part of the Sarbanes-Oxley Act Section 404 compliance plan (CCL, 2010). The COSO framework for ERM provides key principles and concepts, a common language, and clear direction and guidance for organizations to evaluate and improve their enterprise risk management (COSO, 2004).

Carnival Cruise Lines has a structured approach to monitoring and managing operational, financial and compliance risk across the corporation’s spectrum of cruise brands. The system allows a high degree of comparability across the brand portfolio while recognizing the differences that make each individual operating company unique (IBM Corporation, 2011). The key to CCL’s approach to auditing risk is the conceptualization of each of its brands as a set of business processes. Despite the differences in organizational structures, IT infrastructures and market segments, Carnival Cruise Lines’ operating companies all operate primarily in the cruise industry, which enables the organization to establish a common analytical framework. CCL has identified over 300 individual processes that are organized into 13 sections as shown in figure X (CCL, 2010).

1. Understand ma

Balearic Islands consist of four island which are A, B, C and Mallorca. Mallorca is the largest island of the Balearic archipelago which accounts for nearly three quarters of the land with 80% of its population in Balearic Island (Bull 1997, 140). It area has covered about 3640 kilometer per square with the 555 km of the total coast length of the island (Garcia and Servera 2003, 288).

The climate of Mallorca is typically Mediterranean with moderate average temperatures. During the summer, the dry and warm season takes place. The annual rainfalls are 625 mm, with average temperature 16 celcius and 18 celcious except in the high mountain. With its favorable climate, extensive coastline and attractive beaches have lured visitors for many centuries.

The butler’s lifecycle model (1980), describes the growth, stagnation and decline phases of a tourist destination can be best apply in the destination of Mallorca from the growth stage to post-stagnation stage. In the period of “exploration and involvement” stages of Butler’s model which started in 1930’s tourism takes place in Mallorca act merely “as an instrument for stimulating cultural and intellectual activity” (Bull 1997, 141).

Early development stage – 1955s

When it comes to 1955 Mallorca Island is in development stage where mass tourism started to grow during that period. There was a re-establishment of the tourist board that have significantly change the tourism on the island whereby the tourism become more closely associated with the development of package holidays and mass tourism from the growing markets in western and northern Europe (Pearce 1991 and Williams 1997). However in 1959, Spanish government took the initiate to simplify the procedure of visiting the country in order to modernize the Spanish economy through tourism by gaining overseas revenue (Stabilisation Act of 1959). The numbers of visitors started to growth constantly in early 1960s, majority of the visitors were dominated from UK and Germany in large volumes concentrated especially during summer season (Clark 1988) (Figure 1).

Consolidation stage-1980s-1990s

Between 1960s-1980s the consequences from the boom of international tourism to Mallorca, it led to an intensive resort development of the along the coastline. Most of the island originated from the rapid growth of cheap package holidays in the 1960s. However in the late of 1970s, many buildings, resorts and apartments were built in order to cater large numbers of visitors and growing number of the populations. Majority of these early resorts were portrayed by standard high-rise architecture, short of proper infrastructure and lack of planning, which are typical of the consolidation stages of Butler’s model. Buswell (1996, 321) has described the growth of tourist resolution on Mallorca as “unplanned and piecemeal, even chaotic”. After that resorts have been subject matter to stricter planning laws which set up in the 1980s and 1990s. Subsequently Mallorca has maintained its popularity with tourists, particularly from UK and Germany moreover constantly attracts more than 10 m visitors per annum (Buswell 1996 and Government Balear 2003)

Stagnation and Decline stage-1990s-2000s

In late 1990s, environmental pressures begin to emerge in Mallorca regarding to the issue such as water shortages, climate change, overcrowding, and over commercialization as well as anti-social behavior by its visitors. This eventually causes an overall of decline in number of visitors arrive to its destination. In provisions of destination life cycle dynamics, the tourism product of Mallorca was beginning to ‘stagnate’ and ‘decline’ and required management planning and policy intervention to bring about its ‘rejuvenation’ (Butler, 1980).

Development of Mass tourism in Calvia, Mallorca

Calvia is a municipality of Mallorca which is also one of the largest tourism receiving areas. It accounted about one third of the total flow of tourists to Balearic Islands. It covers 145 km? and has a coastal strip of 56 Km of beaches and cliffs which make it as absolutely suitable destination for mass tourism. It offers accommodation for 120,000 bedspaces and with approximately up to 1.6 million visitors a year (Aguilo, Algere and Sard, 2005). Furthermore, with its location in tiny distance from the airport of Palma creates an easily accessible to the visitors. The population of the resident increased from 3000 in habitants during 1960 up to 30,000 in the late nineties (Dodds 2007).

Since 19th century, tourism began to be as main economic activity of its island (Ministerio de Economia y Hacienda, 2005). Tourism development in Calvia boomed in the 1960s and has been based on short-term economic gain. As Aguilo et al. (2005) states, it was one of the first municipalities to experience negative effects of mass tourism. Lack of planning regulations resulted in urban sprawl and lack of environmental regard, similar to many Mediterranean resorts.

The model of tourism development in Mallorca has been “based on short-term interest, unlimited building out of tune with local conditions, and an unsustainable exploitation of exceptional natural resources”. Tourist development took place in 1960s to 1980s and was hasty and unplanned.

Economy

In economic point of view, tourism is important as it create job opportunities, infrastructure development as well as foreign exchange. The unemployment rate is much lower than national average (Ministerio de Trabajo 2005) as there are about 31,793 people employed in restaurant-bars, 2057 in means of transportation rental, 483 in supermarkets, 398 people employed in souvenir shops and another 1,684 work in other tourist facilities. Meanwhile 1,402 involved in beach business and 18,003 are involved in providing tourist activities. It has been estimated that Calvia owns a total number of 61749 vacancies providing tourist activities (Molz 2004). It has 30% higher income per capital of national and 5% higher of E.U. levels (Ministerio de Economia y Hacienda 2005). Looking at these figures it becomes absolutely obvious 85% of Balearic Island’s GNP is from tourist industry, and tourism is the major source of income for the municipality of Calvia. Therefore its economy is entirely reliant upon it.

From the statistics numbers given, it can be conclude that there is high number of labour force joining the labour market, the tourist monoculture especially during the peak seasonal pattern, labour with a low salary system, and pressure of work during high season (Local Agenda 21 2001).

Socio culture impact

While tourism provides certain economic benefits to a region at least in the short term, it also causes disturbance to the local way of life. For the locals the concerns may derive due to the unfulfilled promises, destruction of an older and simpler way of life, inadequacy of employment opportunities or dissatisfaction with the economic changes which came with mass tourism development.

Before tourism takes place, Calvia was fundamentally a poor and rural area with little outside contact and general history of emigration with its own language and culture of Catalan roots (Ruzza 2004). However tourism has wholly altered these features; a vast number of immigration from the Spanish peninsula arrived to fulfill the demand for labour created by the growth of mass tourism, particularly in the building industry and the hotel business. Consequent to that the temporary immigrant population, has gradually turn into resident, eventually this causes the loss of cultural identity, conflict over language issues, and lack of social integration within local and immigrant population and tiny participation in local social life.

Although Calvia is Spain’s richest municipality and one of the richest in Europe, it has the lowest level of education in Spain which itself the lowest in Europe (Ayuntament de Calvia 1995). Besides, majority of employment are for waiters and house cleaner which are lack of trained skilled professionals.

Consequences of too many visitors

Reason tourist choose Calvia as holiday destination

The persistence of the sun and sand model (2005, 222), describes that the reason induces tourists to choose the particular sun and sand destination include the climate of 76.2%, the beaches (51.2%), the price (36.4%), and the quality of the hotels (22.2%). Among all, climate is the fundamental reason followed by the beaches which induces tourists for choosing such destination. As a result Calvia received a growing number of visitors who travel to a mass tourism holiday destination attracted by the sun, beaches and the climate. Calvia were seen as a model based on value, in terms of price competition it has lure many visitors especially from UK and German with it standardization of the holiday experience (CIITIB, 2002).

Social impact

For the local point of view, visitors seem to utilize the physical environment from the local however the profit that generated from the visitors are not share with the local community. Thus it create adverse impacts on livelihoods and lack of benefit sharing with the local people who will bear tourism related costs to both the human and natural environment. Eventually conflicts arise between local populations with vast number of visitors as they need to compete for limited use of resources such as water, sanitation, energy and land uses.

For tourists the view is often recapitulate with the statements such as “this used to be a paradise but now it is ruined” because of overcrowding, over commercialization or overdevelopment. The “mass tourism” tackiness and the variety of problems experienced in Calvia have too often created blemish alongside beautiful natural scenery; crowded with large numbers of tourists as if they were many cattle; ruined traditional cultures and occupational patterns by creating a insidious tourism industry characterized by low paying service jobs and manipulative values; and ignored the needs of local citizens and the community values that were inconsistent with pragmatic economic requirements of the tourism industry.

Environmental impact

The risen numbers of visitors and residents have immense environmental pressure in Calvia. As mentioned in butler’s life cycle, Mallorca was in the period of ‘stagnation’ in 1990s may lay on the line by emerging environmental pressure particularly water shortages and climatic change.

Inadequate water supply

The issue of inadequate water supply especially during peak period and summer season, water supplies is exacerbated by visitors’ flows for use in hotels, swimming pools and golf course. According to the statistic documented in 1995, the water consumption by visitors amounted of 160 liters per day whereby resident is only 130 liters.

High demand in energy consumption

Annual consumption of primary energy in Calvia amount to 72,000 TEP per year of which only 2% is renewable. However, the consumption per day was 6.47 kwh and visitors consumption amounted to 2.14 kwh per night stay in a hotel (Dodds 2007).

Pollution by Transports

The emissions of carbon dioxide equaled 1,400,000 tones which 58% is due to transporting tourist in and out of Mallorca. In Calvia 1995 statistic,70 million journeys per year where 50 million where from visitors which are a major cause of traffic congestion.

Urban waste

In 1995 Calvia produced 41000 tones of urban waste with approximately 1.25 kg per resident / day however 1kg per visitors per day. Moreover the options for disposal were limited. The production of wastewater and solid waste in visitor areas often surpass the carrying capacity of local infrastructure due the high seasonal demand.

Deterioration of the Land use

Building development in Calvia has been excessive with mass occupation of sandy beaches and important enclaves along the rocky coastline. With over 60% of Calvia territory was affected by soil erosion. There was continuous land occupation by urbanization and development of new infrastructure damage caused by quarries and waste dumps and devastation by forest fire. According to an accounting of the distribution of the entire area of Calvia made by Schmitt () in 1991 the build-up-area has quadrupled in the years from 1968 to 1991 (+311.6%). However 57% of archaeological heritage were at high risk of deterioration.

Overcrowded beach

Almost 80% of the analyzed cases show overcrowding despite an urban beach or natural beach. There is a strong seasonal concentration of visitors between June and September because of the demand for sun and beaches. Subsequently this led to overcrowded beach with less than 6 m? of beach surface per person with increasing anthropogenic pressure over the coastal zone (Garcia and Jaume 2003, 287).

Solution

Calvia is an example of a mass tourism destination which, from a result of tourism pressure in the late 1980s, faced significant economic, social and environmental decline. As mentioned by Butler (1993) tourism is an activity because of its reliance upon the maintenance of natural environment and natural processes, should lent itself toward sustainable development. In the case of Calvia the decrease of tourism numbers and Balearic Island as a whole driven regulations and efforts to move towards addressing the problems of the degradation of the environment, deterioration of social systems and facilities and the threat of further tourism decline.

Definition of Planning and Policy

The definition of planning is extremely ambiguous and difficult to define. Chadwick (1971, 24) states that “planning is a process of human thought with an action based upon the thought – in point of fact, forethought, thought for the future, nothing more or less than this is planning”. Meanwhile Hall (2008, 90) supported Chadwick’s ideas to conclude that “most important aspect of planning is that it is directed towards the future”. However, planning cannot be accomplished without policy because it is closely related terms. Wilkinson (1997) linked planning and policy by stating planning is a course of action, whereas policy is the implementation of the planned course of action.

Planning and policy in the case of Calvia

Calvia Plan for tourist Excellent – 1990

The plan was developed in 1990 as to target the threat of decline. It comes along with the Balearic Autonomous community in cooperation with the municipalities as to modernize, improve and diversify the tourism. This plan included building clearance to regain open space, try to counterbalance the seasonal nature of tourism and training and employment. However this plan is mainly focused on the industry supply side instead of sustainability of the destination and host community did not involve at all. As a result, it did not attempt to overcome the growing issues that have arisen.

Calvia Local Agenda 21 (LA21) – 1995

At the end of 1994, the Town council of Calvia, together with a range of working groups, drew up the “Local Agenda 21 for Calvia” as a long term strategies integrated with economic, social, territorial and environment actions. In formulating LA21 in 1995 and Action Plan in 1997, the Municipality of Calvia actively involved the support of local community, all the stakeholders, NGO as well as national and EU governments.

The key objectives for LA21 Calvia concentrating on entering a new culture based on sustainable and participatory urban and tourism planning; emphasize environmental management of the destination, look for for agreement and consensus with social representatives, control development and act for more stable employment in the area. (Calvia Agenda Local 21, Mallorca, Spain 2004).

In 1998 New Balearic Law in Calvia was set out as to limit accommodation growth, restore existing hotels and to protect 40% of natural areas. The objectives of the LA21 comprises of 10 strategic lines of action and 40 initiatives.

Key results that have been achieved since the implementation of Calvia’s 1997 plan

The LA21 Action Plan which were set out in 1997 were seems to have improvement in a general movement toward sustainability within the region and as Calvia is fairly autonomous, it was able to adopt and implement many initiatives without the need for collaboration from higher government. Among those key results that have been achieved since the implementation of the LA21 action plan are stated below:

Planning and Regeneration

Zero increase in number of hotels and apartments as well as drop of 200 beds

1993-2002-about 30 building clearance plan actions were carried out including actual building demolition and the purchase of urban plots to prevent further construction.

Demolished buildings of the entire surface area reaches more than 13,500m?.

Upgraded area in Magaluf & Palma Nova tourist area by creating pedestrian zones and planting tree as to improve the overall quality of the area.

32 km cycling and walking path was built in Paseo de Calvia

Environmental instruments

Tax on water for conservation and awareness campaigns promoting its use and conservation established

Recycling & urban waste reduction plans to ensure 70% of all urban waste is separated at origin, facilitating & reducing cost of recycling effort, minimizing land fill.

Termination of sea dredging previously used to generate beaches and more environmentally friendly measures put in place to minimize erosion

New regulating for limiting anchor damage & harbor congestion caused by boats

Establishment of marine park & terrestrial protected areas as to protect wildlife & ecosystems

Economic instruments

Impose an eco-tax in 2002 by Balearic Government; the funds were used to carry out Calvia council rehabilitation and regenerative projects.

Voluntary instruments

Renovation programmes for hotels, tourist accommodation and tourist facilities established to upgrade quality and attract a higher yield tourist

Socio cultural instruments

Programmes to combat crime, housing and other social issues

Multi-cultural and social programmes such as dance, underwater photography and language classes established to help integrate immigrants into Mallorquin culture.

Calvia has been recognized internationally for its efforts

conclusion

Calvia

2.0 The development of mass tourism in Calvia, Mallorca.

2.1 Definition of Mass Tourism

Over the last decades, tourism has increasingly playing a vital role as a source of economic sector despite for many developed and developing countries. The tourism industry has given an opportunity to millions ofpeople to travel internationally, as travel and recreation are becoming more accessible to people,it is knowable to be the world leading economic sector during this decade.

Tourism is defined by the World Tourism Organization as travel for recreational, leisure or business purposes. In particular, tourists are people who “travel to and stay in places outside their usual environment for more than twenty-four hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited” (WTO, Ottawa Conference on Travel and Tourism statistics, 1991).

Business tourism is a therefore part of the wider tourism industry, that can be represented as a spectrum, along which the business is at the high quality, high yield end.

The terms “business tourism” and “business travel” are often used interchangeably, but actually a difference exists as stated by Swarbrooke and Horner (2001). The first one, in fact, refers to the all aspects of the experience of the business traveler and is much more focused on those business people behaving as “tourists”, e.g. spending at least one night away from home. At this proposal, Davidson R. (1994) gives the following definition of business tourism: “Business tourism is concerned with people travelling for purposes which are related to their work. As such, it represents one of the oldest forms of tourism, man having travelled for this purpose of trade since very early times”.

Business travel underlines the movements of business travelers from one place to another one, including also those who make day trips for business purposes. Obviously, the boundaries of these two definitions are not so clear and precise and often there’s a sort of overlap between them.

There are other definitions of business tourism. IMEX [1] , for example, speaks about business tourism as the provision of facilities and services to the exhibitions, business events, incentive travel and corporate hospitality.

Generally speaking, business travel refers to all the travels linked with the traveler’s employment or business interests. There can be various motivations at the base of business travels. They can be necessary in order to perform the work or they can enable the employee to learn how to do their job more effectively; in other cases, they can be a sort of reward for a job well done. The major forms of business travel and tourism are represented in Figure 1.

Figure : Typologies of business travel and tourism

Source: Business Travel and Tourism (J. Swarbrooke, S. Horne)

These categories are not exhaustive, but could be subdivided into other classifications.

In more detail, the sector comprises, as suggested Davidson and Cope (2002):

Individual business travel: refers to the transfers made by those people doing a job that requires travels, such as journalists, politicians, talent-spotters.

Meetings: includes a vast range of events, such as conferences, training seminars, business presentations and product launches, annual meetings, held by companies and associations in order to facilitate communication with and between their employees, customers, stakeholders, etc.

Exhibitions: they can be trade fairs, trade shows and consumer shows and they are events for buyers and sellers in specific trade sectors. In these occasions, businesses take parts with their sales staff in order to display their products to potential customers, who attend to buy and receive expert information about the goods, usually from the manufacturers.

Incentive trips: comprises the trips that employees receive from their companies as a prize for winning a competition related to their job, e.g. productivity bonus and they are used by organizations to motivate their staff. Usually, they are offered in industries with high profit margins such as cars and financial service. Qualification for incentive travel is based on achieving agreed goals (sales targets).

Corporate events: include staff and client entertainment that companies extend to their most valuable customers or prospects at prestigious sporting and cultural events. This is a form of entertainment that companies use as a way of creating goodwill and building relationship with VIP customers and leads. Close links exist between the corporate vent segment and the catering industry.

In the case of individual business travel, the destination is usually fixed, as the traveler must go where the client to be visited is based or where the problem has to be solved, where the contract has to be signed. It’s the only non discretionary sector of business travel because the destination is not chosen, but determined by the object of the work.

All the other cases, that can be named business tourism, are discretionary. This means that the organizers have a choice over the destination of their events. These sectors are “the prime focus of marketing activities by venues and destinations, because decisions about where the events take place are open to influence” (Rogers, 1998). Attendance to these events takes the form of group travel, with colleagues travelling together.

Frequently, an alternative term used to describe the business tourism sector is the MICE industry, the acronym for meeting, incentives, conventions and exhibitions.

There are some key characteristics of the business industry as depicted by Business Tourism Partnership in England, that can be extended to the overall corporate travel, including the following:

business tourism is year-round, peaking in Spring and Autumn but still with high levels of activity in the Summer and Winter months, thus sustaining permanent, full-time employment.

it complements the leisure tourism sector, relying on much of the

same physical infrastructure, and bringing business to destinations such as seaside resorts which would otherwise be dependent upon a relatively short Summer season for their economic health and prosperity;

investments in business tourism facilities lead to the regeneration of urban and inner city areas, many of the investments in a destination’s infrastructure designed primarily for the business tourist (hotels, transport and communications facilities, restaurants, attractions and amenities, even conference auditoria) provide benefits which can also be enjoyed by the leisure tourist and the indigenous population;

it is elastic, being much less affected by economic downturns or

by disasters than leisure tourism and other sectors of the national economy;

business tourism stimulates future inward investment as

business people see the attractions of a destination while travelling on business or to attend a conference, exhibition or incentive, and then return to establish business operations there. They can also become unpaid ‘ambassadors’ for a destination by communicating to colleagues and others their positive impressions and favorable experiences;

the higher quality of personal service demanded by the business tourist requires more labour-intensive service suppliers, which in turn translates into higher levels of job creation;

research suggests that approximately 40% of business travelers will return with their families as leisure visitors to destinations they have enjoyed visiting on business;

business tourism is sustainable, offering higher added value with

fewer negative environmental impacts than mass leisure tourism. Furthermore, conference and incentive visitors are together as a

group, so that it is possible to inform and educate them about

the local community in which their event is being held in order to

maximize the enjoyment of their stay but also to minimize any disruption and possible inconvenience to the local resident

population. It is very much harder to manage, in the same way,

the impact of individual leisure travelers on a destination.

The business travel sector (figure 2 represents the general structure of the industry) depends on a considerable number of stakeholders, providing facilities and services for this market.

Figure : The structure of business travel and tourism

adapted from Swarbrooke and Horner (1996)

Private companies, both small and large, are the main consumers and providers of business travel services, although they are not the only types of organizations active in this market. In fact, representatives and employees of the public administration also need to travel frequently and members of associations are important clients in the conference sector.

Moreover, an important difference exists between business travel and tourism. There are in fact two dimension: the customer and the consumer.

While in the leisure travel market, the purchaser coincides with the end consumer, in the corporate travel market the person who travels is rarely the person who is paying for the trip. This detail is important because players in this industry must address their efforts not only toward the satisfaction of the demand, and so the buyers, but also towards the end consumers. A large percentage of the business travelers is composed by managerial and sale staff who have the power to make decisions or to influence the decisions taken by others. They have the authority to negotiate on behalf of their companies.

The public industry can be considered as both supplier and intermediary. Many conference centres are owned in fact by local authorities and destination marketing organizations are almost always supported through a combination of public and private sector.

As regards the suppliers and intermediaries, there are different players in the industry: destination marketing organizations, transport providers, accommodation and catering operators, suppliers of leisure and recreation facilities.

As many other industries, business travel is influenced by the state of the national economy. At the same time, this sector has an impact on the overall economy of the destinations to which the traveler make their trips.

The brainstorming process took about a week. After careful thought and consideration, we decided to venture into the hotel business. There are many reasons for this. Firstly, we felt that the demand for hotels in Singapore will be very high as Singapore is a booming tourism industry. Furthermore, many events in Singapore such as the Formula 1 Grand Prix and the upcoming Youth Olympic Games ensure that there will be countless tourists flocking to the little red dot. Also, we noticed that not many people venture into the hotel business despite its high demand. Thus we decided on using the hotel as our main business.

We have also created a website, Facebook and Twitter accounts to further enhance our business. This serves as a platform for our customers to know more about our business and also serves as a communication platform between our business and valued customers. By doing this, we can receive feedback from our valued customers and establish a positive relationship with them.

Our Profile

Business Name: Skylark hotel

Business Location: Stadium Boulevard, 52 Stadium Road (397724)

hotel location macro.PNG

Business Objectives: Skylark’s objective is to treat all guests as prestigious members of the hotel, by employing dedicated staff to cater to the guests’ needs and wants during their stay. The safety and satisfaction of our guests is our primary responsibility.

Mission Statement: To provide authentic hospitality by offering exclusive service and facilities for your comfort.

Vision Statement:

To provide great experiences to each valued guest that walks through Skylark’s doors by building a trustworthy and long lasting relationship with our prestigious guests through a process of continuous improvement in our service.

Values:

Sincerity? To establish and maintain a level of trust with our guests.

Keenness? To show a willingness to learn from our mistakes and reflect upon the guests’ feedback.

Youthful? To allow the employees to bring their enthusiasm to work and have fun.

Loyalty? Dedication and full commitment in serving our valued guests

Accountability? To take ownership and responsibility in all the tasks that are being allocated

Respect? To have a basic courtesy level between colleague, subordinate and top ranking managers.

Kind? To be polite and courteous to every single guest that walks through the Skylark’s doors.

Smart Goals

We are aiming to welcome at least 1000 guests within the first 6 months of our official opening, thus making expected hotel revenue of $500,000.

To achieve full occupancy during the Holiday periods.

To be known as an eco friendly hotel by the end of our 1st year operation

To be featured in the hotel business magazine by the 2nd year of our operation

To be awarded the ‘Excellent Service Award’ by the 3rd year of our operation

Policies

All hotel room rates are subject to change without notice. Payment may be made by cash or credit cards such as MasterCard, Visa or American express card.

We are committed to minimising the impact of our operations on the environment.

We are willing to comply with most of the laws and regulations with regards to saving the environment.

We will prompt our guests and employees to participate or lead in the protection of our environment.

We will ensure that the products supplied by our suppliers is environmentally-friendly.

Monitoring the performance of hotel and employees will take place every 6 months so that we can review what we have achieved or failed and improve on it accordingly.

We will not be held liable for any loss or damage to any valuables.

We will not be held responsible for any accidents or injuries to our guests during their stay in our hotel

Procedures

If the reservation made by a potential guest has been confirmed by the hotel, the guest is guaranteed a hotel room. Though we cannot give a guarantee to satisfy our guests’ request, we will try our best to satisfy any requests made relating to room number or location. All reservations must be made at least 3 days prior to your arrival date.

All reservations will require an advanced deposit equalling the cost of staying in the requested room for a day.

All cancellations of reservations have to be made the day following the reservation. If it is cancellation is made any later, deposits by the guests will be forfeited.

Our check-in time is anytime after 12 noon.

Our checkout time is 12 noon. A late checkout charge of $150 will be charged to rooms that check out after 12 noon.

Hotel guests will be responsible for any damages found in their room once they check out.

Rules and Regulation

The hotel is authorized to only accommodate properly registered guests. Guests are to present their valid ID card or passport for confirmation.

Smoking is prohibited in the hotel rooms.

Be advised to keep your valuables in your room safe which is located in your cabinet.

On the basis of a confirmed booking the hotel is to reserve the room for the guest up to 6:00 PM only, unless the booking stipulates otherwise.

Guests should not move furniture, or interfere with the electrical network or any other installations in the hotel rooms or on the premises of the hotel without the consent of the hotel management.

No gambling of any kind or unlawful behavior is permitted in the hotel.

Employees are to wear their uniform smartly in the hotel premises at all time.

Planning
Decision making model

Ratings from 1 to 5 shows which business fits the criteria the best.

Business venture
Type of business
Knowledge of
the field
Practicality to
be applied
in Singapore
Maintenance
Expense
Uniqueness
Total

Retail shop

2

3

3

3

13

Restaurant

3

5

4

2

14

Hotel management

5

4

2

4

15

Investment centre

4

2

5

1

12

Sports complex

1

1

1

5

8

Definition of criteria:

Knowledge of the field? How familiar we are with the different types of businesses.

Practicality to be applied in Singapore? How effective is it to set up such a business in Singapore.

Maintenance Expense? The expenses that will be incurred in future in order to keep the facilities and area of the business under appropriate and acceptable conditions.

Uniqueness ? The type of business we choose must be few in quantity in Singapore

Thus, we have chosen to venture into hotel management as most of us have an extensive knowledge about the field and furthermore, it is can be applied in the Singapore context. Additionally, it is also fairly unique as not many people venture into this type of business.

Location of business
Location
Accessibility
Competitiveness
Amount of Space
Landmarks available in the location
Rental
Total

Marina Bay

4

1

3

4

2

14

Harbour Front

2

4

4

3

5

18

Orchard

5

2

1

5

1

14

Holland Road

1

3

2

1

3

10

Stadium Boulevard

3

5

5

2

4

19

Definition of criteria:

Competitiveness? the presence of competitors who are in similar businesses may affect our profits

Landmarks available in the location? the presence of well-known places of interest located near the hotel.

Amount of space ? how large is the space in the particular area.

Accessibility ? how convenient the location of our hotel is. This means that it has to be near an MRT station and bus-stop. Also, it has to be easily accessible by cars

Rental? the cost of using the piece of land

Thus, Stadium Boulevard has been chosen as the location accessible as there is an availability of bus and MRT nearby. There are also very few hotels in that area and the amount of space to build our hotel is substantially large. Furthermore, the rental fee is relatively cheaper as compared to the rest of the locations.

Name of Hotel
Name
Uniqueness
Meaningful
Number of votes
Total

Olympian

2

6

1

9

Sphere

3

2

0

5

Skylark

5

5

2

12

iHotel

1

1

0

2

Metamorphosis

6

4

0

10

Synergy

4

3

2

9

Definition of criteria:

Uniqueness ? how different our hotel name is as compared to other names. This means that the name chosen have to be distinctive and is not a duplicate of other businesses.

Meaningful ? choosing a name which has a special meaning tagged along with it and is able to represent the vision and mission of our hotel.

Number of votes ? how many of our group members favoured the name of the hotel

We have chosen Skylark as the hotel name because it is considered to be unique. Furthermore, it is considered as meaningful as the work sky represents the location of the business which is surrounded by nature. Also, it has won one of the highest numbers of votes by our group members.

Fundamentals of planning
Strategic planning

Strategic planning is done by top management where long-term goals are established and available resources are identified. The owner, general manager, assistant general manager and resident manager will meet up monthly to review the hotel’s progress and check if the long-term goals are achievable. They will also be responsible for the changing or maintaining the overall direction of the hotel and they will look into ways to cope with the highly competitive hotel industry.

Tactical planning

Tactical planning will be done by the managers under the control of the top management. They will be responsible for implementing the policies made by the top managers. They are also responsible for the managers under their power. Also, in Skylark hotel, these managers will act as middlemen between first-line management and the top management. This means that these managers have to convey the problems the first-line managers face to the top management if they cannot solve it.

Operational planning

The managers in this section are known as first-line managers. They are responsible for carrying out daily tasks and motivating employees. They are also responsible to solve problems with regard to the employees.

Organisational Environment
Internal Stakeholders

The internal stakeholders of our company include 150 employees from a diversity of races and age and genders, an owner, and also a board of directors.

External Stakeholders

The external stakeholders of the hotel comprises of the task and general environment.

Task Environment
Customers

The most important of all is our prestigious customers, both local and foreigners which will help boost our business as they are the main sources of our income. Without the presence of the customers, it will then be impossible for us to make any profits. Our targeted demographic are families. Thus, this explains why we many facilities which permit them to bond together as a family. Quality of Services

Location

Good Food (Buffet)

Attractive Rates – Discount and offer

Environment – Quiet and welcoming colour tones, furniture and employees

Suppliers

As for food and beverages, our main supplier is Pines Catering. External suppliers are also required to provide raw materials for our construction and furnishings. For construction, our supplier is Pluspoint Premier Global while for furnishings; our supplier is Aceman Renovation and Trading.

Competitor

As for our main competitors, they are the nearby hotels which are Resort World Sentosa, Marina Bay Sands and Fragrance Hotel Admiral which may negatively affect our profits.

Our main rival is Resort World Sentosa. Besides providing accommodation, they provide numerous holiday packages for the guests. An illustration is the 3D2N Ultimate Fun Package where they get passes to Universal Studios Singapore and as well as complimentary drinks when they first arrived at the hotel. Marina Bay Sands is also another opponent of our hotel. Besides the usual amenities for the guests, Marina Bay Sands also provide golf course for their customers.

Thus, the packages that our rivals promote aggressively will indirectly affect us as this will reduce the number of guests in our hotel. Our hotel may resort to coming out with similar or even better packages to draw more customers.

Media

By having a close relationship with the media, our hotel will be able to secure recognition faster. Joining forces together with travel agencies, our business will prosper as it helps our hotel to gain reputation. Other stakeholders included the interest groups, the government, lenders and unions.

General Environment

The general environment comprises many external forces which are mostly beyond the control of our hotel.

Economic forces

General economic trends happening world-wide can affect our hotel’s earnings due to a stronger or weaker dollar value. Thus, we need to ensure that our hotel should charge reasonable rates to customers so as to maintain our competitiveness even during a recession. This will allow us to attract more customers.

Socio cultural forces

As Singapore is a multicultural country, our hotel would need to respect and be mindful of the various practices and deep-seated beliefs of the different races and religions.

Technological forces

Our hotel has pertained technology by adapting to the advancements of technology by having our very own website, Facebook page and Twitter account. The website enables our customers to book hotel rooms online, view special offers available and browse the amenities provided at the comfort of their home. In addition, they are able to provide us with feedback on the website and our hotel can improve on our weaknesses and progress.

International forces

As the world has just suffered from an economy crisis, this will cause a decline in the numbers of guests in the hotel. However, Singapore has political stability, which means that there will be no riots or protests to deter the tourists from coming into Singapore.

Political-legal forces

As the law holds up certain rules and laws to prevent inappropriate acts in hotel such as prostitution and gambling. In addition, the law assists our hotel to uphold order to ensure an enjoyable stay for the guests.

Organisation Structure
Task and roles
General Manager

The duties of a general manager include managing other managers and the hotel staff, budgeting cost and cross-referring to actual budget, managing hotel projects, managing hotel emergencies and public relations with the media. This means that a general manager usually oversees most or all of the firm’s marketing and sales functions and the day-to-day operations of the business. The general manager is also responsible for leading the strategic planning functions of the hotel.

Assistant General Manager

An assistant general manager aids the general manager in his decisions such as business agendas. He also assists the general manager in completing the paperwork which is not very important and he is tasked with reporting all problems in the hotel to the general manager. However, he can solve these problems if he is able to and thereby, allowing the hotel to run smoothly.

Resident manager

The main job of the resident manager is to respond to any problems or emergencies in the hotel while overlooking the day-to-day operations of the hotel. They stay in the hotel and are on call 24 hours a day. However, they only work for a certain period of time per day although they are on call throughout the day.

House-keeping manager

Basically, the house-keeping manager supervises work activities of cleaning personnel to ensure clean and attractive rooms in the hotel. The house-keeping manager also assigns duties, inspect work, and investigate complaints regarding housekeeping and takes corrective action as required. He is also required to purchase housekeeping supplies and equipment, train new employees, and recommend dismissals.

Front Office Manager

Front office managers are responsible making the guests’ stay at the hotel as pleasant as possible. This means to ensure that the guests are treated courteously and make sure all the complaints and problems of the guests are resolved as fast as possible. They are also handed the responsibility of reservations, tracking the status of the rooms and ensure that guests’ special request are carried out. They also have the authority to adjust the charges posted on the customer’s bill.

Telecom operator

Hotel telecom operators are required to transfer foreign or outside calls to the appropriate guest room. He also has to answer or transfer all incoming calls. He is responsible for informing the guests about the latest information on guest services and also processes and executes the wake-up calls to the guests. He also helps to inform the guests about the latest events and happenings at the hotel.

Chief engineer

The chief engineer is responsible for maintaining the performance of the maintenance or engineering department in the hotel. He also has to ensure that the hotel is in working order and fix any problems related to the structure of the hotel. He or she has to maintain the exterior of the building, the car park and check the furniture in the guest rooms and take corrective measures if anything is wrong with the furniture. He must be able to respond to emergencies, even after working hours. Most importantly, he must have the troubleshooting ability to be able to solve any problem in the hotel on the spot.

Chief of security

Chief of security is responsible for overseeing the safety of the hotel throughout the day, especially in the evening. He may also have other responsibilities such as walking around the hotel property to ensure that everyone is safe. He is also tasked with responding to guest. The chief of security must be able to solve problems quickly and respond to emergency situations effectively.

Human resources manager

The human resource manager is responsible for the administrative function of the hotel. This means to recruit, interview or hire new employees into the organisation in accordance to the strategic plan made by top executives. They are also responsible for all areas related to employees such as providing them uniforms and giving them employee benefits. Human resources managers are tasked with providing training for the new employees to improve the employee skills and to increase customer satisfaction. In today’s society, human resources managers lead the hotel by suggesting and changing policies after consultation with top executives.

Food and beverage manager

The food and beverage manager is responsible for overseeing, with the chef, the purchasing of all the ingredients necessary to complement the items on the menu. It may require training new employees and monitoring the staff in the dining room to see if they are following the hotel style of service. Sometimes, the food and beverage manager may also be called up to resolve matters with the guests unhappy with the food. It is also very important to keep the morale in the food and beverage section.

Sales director

The sales director is responsible for maximising the occupancy of the hotel. He also works with the general manager with regards to operational issues. The sales director must have excellent communication skills as he is responsible for negotiating with suppliers to provide the goods the hotel needs at a low price and he needs it to establish rapport with clients or suppliers.

Controller

The hotel controller’s job is to report financial information timely and accurately. He is also responsible for financial forecasting, both short-term and long-term. He manages the accounting and financial staff and he may be required to train new employees.

This organisational chart is done in accordance to functional departmentalisation. This organisation adopts a wide span of control. It is because the Resident Manager alone is in-charge of three departments. In these departments, the top supervisors or managers will have another range of subordinates. The organisation has a decentralisation of authority. In each sector of the company, they have their own managers that are accountable for them. The employees do not have to get approval from the General Manager or anyone from around that status. Instead the employees just have to get approval from their immediate manager or supervisor.

Organisation Culture
Hotel Services:

As the top notch hotel, as part of the culture, we aim to serve with a smile. The employees of the hotel should go the extra mile for the customers to make sure they are feeling euphoric. If we are able to provide smiles and go the extra mile, the customers will feel the warmth of the hotel and the chances of them coming back would increase.

Integrity – Our employees must have integrity so that we are able to establish trust with our guests.

Hotel Maintenance:

The customers’ needs and wants are to be satisfied. The maintenance service provider is to be on standby twenty four hours, ready to aid the customers if they request for it. This is to make sure that our customers do not have to wait a long period of time or wait till the next day till the maintenance service provider is available. By doing this, they provide maintenance all day.

Hotel facilities:

The hotel will also look into finding restaurants which are highly recommended by the foreigners to open a branch in the hotel. The hotel will also provide international food just in case some of the foreigners who are not used to the food in Singapore, they can always come back to the hotel’s restaurant to eat the food old in their country.

Hotel Venue Security

The security guards are also to be on patrol twenty four hours around the hotel and at the lobby. This is to prevent anyone from stirring trouble around the hotel or in the hotel. By having such arrangements, our hotel will become a popular choice to the foreigners for our top notch security.

Employee Feedback

There will be a meeting held every six months to help improve the quality of the hotel as well as employees benefits. During this meeting, employees are invited and allowed to voice out their feedbacks about their superiors and the benefits they want to improvement on. As for the employees benefit, all employees are given a twenty percent discount off the total bill when they dine in the hotel. The meals of the employees are also provided. Breakfast and lunch will be provided for those on morning shift, lunch and dinner will be provided for those on afternoon shift. The employees who work over-time will receive one and a half times the basic pay.

Employee Procedure:

All employees are to report to their immediate supervisors or managers for report updates and decision making. However, for key decisions which may affect the company greatly, the Chief Executive Officer will make the final decision. The Chief Executive Officer also has the right to change any decisions made by any supervisor and manager. For documents which need to be signed or approved, it will require at least two manager’s signature and stamp depending on the situation. This is to prevent any misleading by one manager or supervisor causing the company to make a wrong decision. At least with two signatures, two managers would have gone through the document and discussed to make sure there is no fault or attempt of fraud in it.

Leadership

In our company, each and every one of our employee is look upon as a leader.

Leadership style: We would want to have leaders with the following characteristics

Approachable

Each employee is to be able to be approached easily and is able to lend a helping hand when others are in need. Hierarchy is not our main priority in our company. However, basic respect still has to be shown. We would like to ensure a friendly and conducive working environment for everyone.

Influential

Each manager should inspire their fellow colleague, subordinate and employees to do their best in everything that they do. We encourage motivation to spread around the working environment. Little deeds should be praised and recognised. This will contribute to a positive working experience for everyone.

Forward-Looking

Each employee should learn to be forward looking as this will eventually benefit the business in many ways. This does not only imply to the top managers but also all employees. Since we have a relatively flat hierarchy, this helps us to be able to obtain contribution from everyone. By being forward looking, we will be able to seize each and every opportunity that come and also, avoid any circumstances that could affect the profitability of our business. In addition, by being forward looking, we will also be able to stay ahead of our competitors such as Marina Bay Sands.

Reward Power

Our business is using the monetary incentives to manage our employees. This means that employees are given certain incentives for going beyond the call of duty. The best employee of each department each month will be rewarded with a free hotel stay of 3 days 2 nights. This also serves as a motivation for the employees to strive for their best while doing their work.

Hersey and Blanchard’s Situational Leadership

We would also like to adopt the Hersey and Blanchard’s Situational Leadership where the leadership style depends on the employees’ readiness. The leadership styles include telling, selling, participating and delegating. However, we are eventually aiming to use the leadership style of delegating where our employees are able and willing to do their job. This style involves a low task behavior and a low relationship behavior. However, to achieve this, we would use more of selling which involves both high task behavior and a high relationship behavior. This means that the employees are unable but willing or confident. We would then guide them to ensure they eventually will be able to do their job well.

Controlling

Our hotel would like to control the quality of service offered to the guests. We should provide our prestigious customers with the top-rated of service so that they will patronize our hotel again. In order to be top-rated, our hotel has scheduled the work time of the employees in such a way that there will be at least someone available to attend to the needs of the guests.

Feedforward control

Firstly, our hotel will provide our employees with training such as customer service course. This is to ensure that our employees are equipped with the necessary skills needed. Thus, our hotel is able to provide our guests with top-rated service for them to enjoy their stay in our hotel. In this case, we are applying Feedforward control.

Concurrent control

Our hotel can relate Concurrent control, by asking our guests for their valuable feedback during their stay. When our staffs get the chance to meet the guests, we could get their advices and improve from there by incorporating their advices.

Feedback control

Lastly, Feedback control is also useful to bring our hotel to a greater height. Before the guests leave our hotel, we can provide them with a feedback form and request them to rate our service. In addition, they may do this on our hotel’s website if they do not have the time to complete the feedback form. By getting their advices, we could then work on our weaknesses and progress from there.

Our hotel also likes to control the facilities available in our company. We need to make sure that all of our facilities are in tip-top condition for our guests to use.

According to Feed forward control, our hotel will conduct checks on the facilities every month to ensure that every equipment is in working order.

Should we receive any complaints regarding the facilities by the guests, our hotel will send an engineer down to solve the problem immediately. If we are unable to do so immediately, we aim to complete the repairs by three days so that our guests are entitled to use the amenities.

First-line managers can apply operational control by having debrief with their subordinates just before they end their work on a daily basis. They can also mention about the feedbacks and suggestions offered by the guests.

Tactical control can be included by having meetings fortnightly. The meeting compromises of the middle managers and the first-line managers. During the meetings, they can come up with ways to promote our hotel or even adding in facilities to allow our hotel to soar.

Lastly, strategic control is the most essential as it is a meeting where top; middle and first-line managers meet together. The middle and first-line managers can present their suggestions to the top managers. The top managers will then decide whether to implement their suggestions. In addition, they will review the number of customers patronizing our hotel and the revenue of our business.

Also, the controlling process is constructive to assist our hotel’s success. Firstly, we establish our standards by ensuring every employee undergoes customer service training. Our hotel aims to attain a goal of $500000 revenue in the first six months of our operation.

We can measure our performance by taking into consideration the number of guests staying in our hotel and revenue we earned in the first six months.

Comparing our goals with our actual revenue, if we achieved our goal, we will continue with our training and execute other courses that are beneficial for our employees. On the other hand, if we did not attain our goal, we may resort at our publicity and upgrade in our services.

Welcome to the future of Music Event Management. We help in organizing our different Music events with affordable festival. We plan our events base on the purpose of music like music festival. Our music event management services include a complete process of budgeting, event dates, selecting and reserving the event venue, coordinating transportation and parking, developing a theme or motive for the event, arrangement of speakers, decoration of site, catering services, event support and security. We along with our expert teams sit down and make decisions for the betterment of our clients and try to provide an excellent service according to the customer’s demands.

1.0 Introduction

Today, events are central perhaps never before. Increased leisure time and discretionary spending have led to proliferation of public events, celebration and entertainment. Governments now support and promote events as well as parts of their strategies for economic development, nation building and destination marketing. Corporation and business embrace events as key elements in their marketing strategies and image promotion. The enthusiasm of community groups and individuals for their own interest and passion gives rise to a marvelous array of events on almost every subject and theme imaginable. Events spill out of newspapers and television screens, occupy much of our time and enrich our lives.

Source: Special events–Great Britain-Management, Elsevier/Butterworth Heinemann. 2006.
1.1 Define of Event Management

Event management is the process by which an event is planned, prepared, and produced. As with any other form of management, it encompasses the assessment, definition, acquisition, allocation, direction, control, and analysis of time, finances, people, products, services, and other resources to achieve objectives. An event manager’s job is to oversee and arrange every aspect of an event, including researching, planning, organizing, implementing, controlling, and evaluating an event’s design, activities, and production.

The festival was traditionally a time of celebration and recuperation which often followed a period of hard psychical labor, showing or harvesting of crops, for example. The essential feature of these festivals was the celebration or reaffirmation of community or culture. The artistic content of such events was variable and many had religious or ritualistic aspects, but music dance and drama was important feature of the celebration.

Source: (The policy of study institute – 1992)
2.0 Importance of Planning and administering in event management

Event planners design, organize and coordinate conventions, conferences, corporate meetings, exhibitions, etc. In fact, there are thousands of events of every scale that need an event planner’s services. Somebody is always needed to oversee all the details and to ensure that the event happens, successfully.

Event planners are responsible for every aspect, from marketing, catering, signage, displays, translation, audio-visual equipment, printing and security. They also take care of participants’ accommodations and transport. They are responsible for the financial side: setting and monitoring the overall budget for the venture.

Political and Union events.

Conferences and conventions.

Trade shows.

Company socials.

Meetings.

New product launches.

Charity fundraisers.

Grand openings.

Festivals.

Parties.

Event management and planning is a career that offers excitement and a degree of glamour in return for hard work, a large amount of energy and flexibility, and a high level of organizational and logistical skills.

3.0 The Role of Music Festival Manager

An event management professional is responsible for almost every aspect of event, from planning an event to the execution or conducting the event. An event management professional has to take care many operations and processes to organize an event and make it successful which generally include Planning the event, Venue selection for the event, Logistics, Design, Decoration, Negotiation, Media planning, Budgeting for the event, Marketing the event, Ticket sales, Customer service, Managing people, Catering, Hospitality, Time management and Problem solving.

The Music Event Manager is the one essential position for any event committee organizing an event. The Music Event Manager is responsible for:

a-? The smooth running and coordination of the event.

a-? The inclusive and welcoming nature of the event for all.

a-? Ensuring that the event complies with all relevant Federal and State laws and local government policies and regulations.

a-? Ensuring that all forms are filled out and details lodged with the relevant authority.

a-? Ensuring that appropriate permission is received before the event goes ahead.

a-? Recording details of invitees and attendees.

a-? Ensuring that thank yours are sent to those who have helped in arranging or sponsoring

a-? The event and to any special guests.

a-? Advertising the event.

a-? Budget forecasting and financial control.

Event Planning

Role of Music event manager starts with planning the event. Event manager has to sit with client to plant the event, in which an event manager comes to know the purpose of the event, type of event, number of attendees, facilities required for the event and the timeline of the event.

Budgeting

Budgeting immediately comes after the planning of event. Every client has his own budget for the event. A Music event manager has to plan and organize the event within the budget. Every activity after planning the event will depend on client’s budget, whether it is venue, food, decoration and gifts or any other part of the event.

Venue Selection for the event

Once the purpose of event, number of attendees, required facilities and timeline of the event decided, then the venue selection and venue booking comes in the focus. Every venue is not suitable for all kinds of events. Venue selection depends on purpose of event or type of event (i.e. venue for wedding could not same as for the venue of brand promotion or product launch), number of attendees and many other criteria. Good venue selection makes a deep impact on event.

Logistics

Administering the logistics for an event means planning, booking, outsourcing and monitoring many parts of the event with the help of team. Decoration, kind of furniture required, number of general furniture items (i.e. chairs for attendees), number of special furniture items (i.e. podium for speaker), water, electricity, sound, light, photography and video, menu planning, catering services, lodging and transportation of special guests or chief guests of the event, selection and packaging of return gifts (in many events) and many other activities are included in administering the logistics for an event.

Many times, the client preferred theme party. In this case, a Music event manager has to arrange and monitor some additional logistics.

Advertising and Media Planning

Advertising and media planning are required for many social events (i.e. musical night of renowned singer) and corporate events (i.e. product launch). For many other events, ticket selling is also required (i.e. sports events, movie premiers). A Music event manager has to plan and execute all these activities also.

4.0 Why an action plan is necessary for music festival

This stage is to start formulating a Music Action Plan. To be clear, the Music Action Plan is a live management tool that details key project milestones and activity against a timeline – it should be continually reviewed and updated as the music planning and operations progress. The music Plan, on the other hand, is a strategic vision and planning document which outlines the event objectives, states the business case and gives financial projections and information over a given time period (often 3-5 years). The Music Plan should be reviewed at key stages as agreed by event partners (most likely at the beginning of each planning stage).

It is important to commit our thoughts to paper. This is essential in order to help our understand and share what has to be done, when and by whom. It’s also a requirement if we are looking to convince others to invest in our event. Putting together the Music Event Action Plan is a straightforward task that involves listing key activities against a timeline and stating who will be responsible for delivering each element. Critically, it will help us to ensure we have enough time to complete all necessary tasks and help all involved understand their responsibilities.

Key activities listed in our Music Event Action Plan may include:

> Writing/updating the Music Plan

> Identifying event partners and supporters

> Recruitment and training

> Fundraising activity and deadlines

> Budgeting milestones

> Key meetings – i.e. steering group or sub-committee meetings

> Confirming venue(s)

> Booking or commissioning program elements

> Pre-production/production milestones

> Implementing the Marketing Strategy

> Live event

> Monitoring, evaluation & reporting

. Use team meetings to update the plan and then make sure that all revisions are circulated to those who are working from the plan. Depending on the size and complexity of our event, we may have separate, more detailed Action Plans for different work areas or ‘departments’. For example, we may have one for marketing, one for production, one for fundraising, etc. It’s a useful approach to be able to show the entire activity timeline and also to be able to break it down into ‘departments’. We may have project management software to help put us together our plan, but if not, a simple activity/month table is useful.

Below is a basic template that we could easily replicate in Microsoft Word or similar packages. We have included some sample entries to get us started. As appropriate, we can expand our Action Plan by providing the necessary detail.

The point is that it has got to work for us and our event. This chart may be identified why is it necessary for our event.

Development of Music concept or event bid

Feasibility Study

Cost and benefit of events

Events resource and infrastructure requirements

Decision to chease

Decision to proceed with new event

Established of organization structure

Conduct situation of analysis

Creation of control system

Development of evaluation of feedback process

Source adapted from Getz (2005)

Techniques that can be used to monitor progress in music festival

The Event Manager’s role includes ensuring that the music event runs smoothly. A key role is to communicate with all officials and volunteers to ensure that their tasks are being carried out. Always check off the time-line of tasks and duties before and during the event. As tasks are interrelated, it is essential that they are completed in the time planned so as to keep the whole process on track. It is the Music Event manager’s responsibility to ensure this is done. It is good practice to set regular meeting dates and times for the various individuals and subcommittees to report. Keep minutes and records of all meetings and follow-up on tasks between meetings. These records will be used for monitoring and coordination as well as for the final evaluation, event reporting and input to planning for future music events. Computer programs or work flow charts for project planning and management are also useful for music event monitoring and record keeping. Continuous monitoring is essential for successful events and provides early warning if things begin to deviate from the plan. The earlier any deviations are noticed, the greater the chance of dealing with the situation before major reorganization is required. The more slack time between critical tasks, the more options for adjustment. If the plan needs adjusting because of over-runs of time or resources, the main options open to the

Event Manager and the event committee are to:

aˆ? find additional resources (eg recruit additional volunteers or seek more funds)

aˆ? reassign resources to shorten critical tasks (eg move volunteers or finance from one task

area to another)

aˆ? reduce costs and/or reschedule key tasks (eg drop non-critical tasks or move non-critical

tasks to another time).

5.0 The importance of monitoring or evaluating each stage of planning cycle in music festival

The music planning process is an ongoing cycle that incorporates a series of different stages. The outcomes of one stage may change the next stage of the plan. One way of thinking about the stages involved in the planning cycle is:

Assessing the context- What need to be done?

Detailed planning-who, what, where

Monitoring and evaluation

Agreeing the outcomes

What difference do we want to make

Agreeing action

How will we go about making difference

Setting indicators how we will know we made a difference

Each stage feeds into the next, making planning an ongoing activity which is closely linked to evaluation. Planning with communities needs to build upon where the community is now, taking time to identify strengths, opportunities and priorities, and it needs to go at a pace that suits the community. Sometimes earlier stages of the planning cycle will need to be revisited and adapted based on the changing context.

6.0 The importance of time management in music festival

Time is one of the most important factors in life. Once time goes it never comes again. Once a thing is done it is done it cannot be changes. One can’t go into the history nor change it. Time is as important as money one should spend it carefully. Here are some of the reasons why time management is so important for music festival.

1 Time is limited – Time is limited one cannot store or save time. In during the period everything is to finish in music festival.

2. Too many things to do – Time is limited but the things to be done are many. One need to maintain a proper schedule and choose the right time for the right activity. Time management helps to choose the things to be done. Time management helps to manage more time to do the things which are more valuable and important to do in music festival.

3. Time management helps to finish the different task in less amount of time- Time management allows to allot good amount of time to different things and get the different things done. By using time management one can plan and organise his activities properly in music festival.

4. Make us conscious about time – Time management makes us conscious of the time we have and the different things we have to do in the available time. By being conscious about the available time one used the time more carefully in music festival.

5. Change music festival activities – Time management changes music festival activities. People like different music to different symphony by time management. Now music festival has arranged all in one activities.

Time management is very important in music festival because all the festival activities has to finish during the festival period.

7.0 Methods Used to Evaluate Success of Music Festival

Radio advertising should be predominant for the repositioning- our target audience are large radio listeners, and respond well to this media.

Internet – the target audience very technologically aware and a viral e-mail campaign with a well developed, interactive, website is essential to increase awareness.

In addition we should have a campaign through printed media- there are many specialist magazine aim at the target audience and we should use these to promote sales. (See below)

Music festival Manager such as posters should also be used and

Sales promotion

Sponsorship and PR

8.0 Conclusion

Manager is there to work in event. It is all about planning, planning and more planning. It is more significance on the company festival manager. It is necessary to change new horizon of music festival. Because people needs new quality of music festival. We can say for arranging any company follow our music festival and also important to develop organizer activities. This is important for company festival manager to change new horizon and creativity in new path of organization. An event manger organizes all the festival activities and preparing event atmosphere in his decision.

Tourism has been one of the economic success stories of the last 40 years. It has grown into a major component of the world economy and one of the most highly developed and dynamic industries with an important contribution to incomes and employment. Tourism has been rapidly growing sector and a wide-sweeping socioeconomic phenomenon with broad economic, social, cultural and environmental consequences. It is likely that tourism will continue to dominate the international scene for many years to come. (Sharma, 2011)

The environment is perhaps one of the most significant contributors to the popularity and attractiveness of a destination. Sceneries, pleasant climates and unique landscape features have an imperative influence in tourism development and the spatial distribution of tourist movements. Apart from environment, the other important tourist puller is culture in all its diversity across continents. Cultural tourism has long existed, but recent demographic, social, and cultural changes in the main source countries have led to an increasing number of new niche markets in destination countries, including culture-oriented holidays.

However, like other forms of development, tourism has also contributed to its share of problems, such as social interruption, loss of cultural heritage, economic dependence and environmental degradation. (UNEP, WTO, 2005). Learning about the brunt of tourism has led many tourists to seek more conscientious holidays. These incorporate various forms of sustainable tourism such as: ‘nature-based tourism’, ‘ecotourism’ and ‘cultural tourism’. The major problems arise because the environment (at least in the short term) is a zero priced public good and as with any zero-priced good, is subject to excess demand and over-utilization. This over-utilization of the natural resources and exploitation of cultural heritage especially during the peak periods of tourist activity as well as often ill planned tourism development, have provided a number of examples where tourism is in conflict with the environment (Coccossis, Parpairis, 1995). Not only that, as a result of environmental consciousness, a great number of alternative forms of tourism been developed in the last decade. Sustainable Tourism promotes limited-scale, low-impact, community-based activities. It may be defined as “tourism that gives stress to the contact and understanding between the hosts and the tourist, as well as the surroundings” (Smith & Eadington, 1992) or as “tourism consistent with the natural, social and community values and that allows a constructive relationship among locals and tourists”. (Wearing & Neil, 1999).

Sustainable environment requires sustainable design. Architecture and design can preserve the memorable and old monuments while it can also create new and attractive qualities in which people can use and enjoy. Architecture has the talent of defining spaces and therefore has a powerful influence on the human behaviour and understanding and this is exactly what is always taken into account in sustainability, maximizing economic benefit and preserving the ecosystem. But what should be the approach to this design to achieve all goals of sustainable tourism or rather what are the tools and principles of architecture that need to be adopted to embrace sustainable tourism need to be developed. Thus the question to be answered is:

What should be the architectural approach for sustainable tourism?
Defining Sustainable Tourism

Sustainable tourism is often considered to be a special kind of tourism that appeals to a particular market niche that is sensitive to environmental and social impacts. This is a narrow view as sustainable tourism is much more than a discreet or special form of tourism. The term sustainable tourism refers to a primary objective to make all tourism more sustainable. It is a continual process of improvement, one which applies equally to tourism in cities, resorts, rural and coastal areas, hills and protected areas. It should be thought of as a division of tourism, not a type of tourism. Sustainable tourism is based on the three ‘pillars’ of sustainability (economic, social and environmental) and is simply defined by the World Tourism Organization as: “Tourism that takes full account of its current and future economic, social, and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities.” (WTO, 2005),

Sustainability is a process and not an end state.

The built environment and Tourism

Tourism has an adverse effect on built environment. It could be on architectural facade, change of landuse, overburdening of infrastructure etc. Large scale construction of tourist facilities and other infrastructure tends to change the land use of an area and also disturb the natural ecological harmony of a destination.

Also tourism brings changes to the vernacular technology and sometimes the traditional constructions simply vanish giving way to modern construction which is most of the time not following and principles of sustainability. Instead they create harm to the destination, eventually losing the character, being environmentally disturbing and not suited to the needs apart from commercial aspect.

Some of the other impacts of tourism on built environment and architecture of a place are: over-intensive urbanization, illegal constructions, pollution, negative aesthetic changes, degradation of quality etc.

Need Identification

Tourism now accounts for 10% of the world’s economic activity but at the same time it has major impacts on the natural and built environments and as well as on well being and cultures of host population. Ecological, social and economic sustainability are intertwined. Tourism and architecture may be connected to the benefit of the two and ultimately to the benefit of the people. There has been only a very little research on the role of architecture and the approach that should be followed when targeting sustainable tourism.

Since building activities like construction of hotels, guest houses, tourist centres, commercial centers etc dominate the development of tourism at any place, there is a need to develop an approach and policy on architectural developments as part of sustainable tourism. This problem is of fundamental importance as it has led to the absence of an adequate theoretical foundation for understanding the dynamics of alternative tourism and the social activities it involves and responding to it accordingly. Sustainable design and planning do not jeopardize the economical benefits that a healthy tourism industry can bring; on the contrary, they can enhance local peculiarities and make use of traditional knowledge and expertise. Where sustainable methods and materials are employed, buildings can be both ecologically and economically profitable, thanks to their lower construction and life cycle costs.

This dissertation will be a small effort in the same direction.

Scope

Sustainability does not require a diminished quality of life, but it does require a change in mindset and values toward a less consumptive lifestyle. These changes must embrace overall interdependence, ecological stewardship, social responsibility and economic feasibility.

Various government bodies, international organizations and conventions have stated the importance of tourism and its sustainability. Many countries as well wish to or have already initiated the pursuit to policies of ‘sustainable tourism’. In fact one of the most important issues in sustainable development of tourism resources is the consideration and expansion of design and construction standards in order to reach an optimum use of energy, water and land resources.

The scope of the study will be to understand sustainable tourism and its forms keeping in mind the delicate destinations specially, be it in terms of their ecosystem, cultural heritage or economic stability and state principles that should govern the architectural design and planning of the tourism infrastructure keeping in mind sustainability as defined above.

To lay down the architectural ethics in planning and designing of tourist needs like hotels, guest houses , activity centres etc suitable to the ecosystem ,society and economy. The study will concentrate on the fragile destinations since there is more need there but the applications will be in general universal. The scope of research is in guidelines published by international bodies keeping in mind Indian destinations.

Limitations

The case studies where sustainable tourism developments have been implemented will not be accessible physically and the research will have to depend on secondary sources of data.

The primary case study will be covering a destination which is fragile ecologically, culturally and economically. It might not be possible to make multiple visits and at the same time while doing the survey the lack of academic knowledge regarding the subject amongst hosts could lead it directionless.

None of the tourist destinations in India has adopted sustainable tourism as a whole. Few resorts, localities etc have adopted sustainability within them.

Sustainable tourism is a relatively new term; the research on it will be limited to data over the past 3o years only.

Since the scope has to be limited the research will concentrate particularly on role of architecture in sustainable tourism and not other means of achieving it.

When formulating the survey questionnaire, the lack of knowledge about sustainable tourism might lead to indirect framing of questions. Also people will have to be relied upon for being honest which might not be the case for all.

1.7 References and Bibliography
References

Khaksar,A., Tahmouri,A., Hoseinrazavi,S., 2001, The Reciprocal Effects Of Architecture And Tourism: The Sustainability Approach, Allameh Tabataba’i University, Tehran, Iran

Sharma,K., 2011, Sustainable Tourism Development Through Sustainable Architecture: A Projected Case Study of Cox’s Bazaar, Bangladesh. Master’s thesis, University of Huddersfield

UNEP and WTO, 2005, Making Tourism More sustainable: A guide for policy makers

Indian bus service industry was extremely unorganized till recently before redBus emerged and took the industry by its neck and brought a sort of revolution never imagined for such an unorganized industry. This was primarily because the information flow and availability in this industry was very difficult and there was a lot of mismatch. The bus ticket industry was highly fragmented with small players active regionally. All these were small small agents competing against each other. Due to lack of any major player there was not much competition for redBus and hence it was able to create a marketspace for itself through entering the bus ticket industry online. By the time redBus entered the horizon there were settled names both in airline and railway ticket booking industry who were operating online. But even for them it was a huge task to enter bus ticketing industry due to the sheer complexity present in the industry and emulating the online model for bus ticketing industry was perceived to be almost impossible even by these major players in e-commerce. This study deals with how a disruptive model can change the scenario of the complete industry. redBus which at the time of its inception was confined in a small flat of 2 rooms is now a 400 million company with over 400 employees and offices across India. Currently it is the only major player concentrating completely on bus ticketing industry with a market share of over 70%. In this research, I have tried to analyze the bus ticketing industry and how redBus identified the opportunities present in this segment and created a value chain which not only gave them a distinct product but also at competitive cost. It is a perfect example of Blue Ocean strategy where entry of redBus changed the entire landscape of the industry. It revolutionized the way the people buy bus tickets in India. One of the unique bus ticketing system of its kind in the entire world, competitors have leaped in this market but none has received success like redBus. This study further covers how redBus has sustained its competitive advantages and what are the challenges and growth opportunities going forward.

CHAPTER-1 INTRODUCTION: Blue Ocean Strategy

As the authors of the book Blue Ocean Strategy, W. Kim Chan and Renee Mauborgne say: Although the term blue ocean is new, their existence is not. They have been a part of business transformation in past as well as in present. If we look back in the past say a century ago, How many of today’s industries were then known? The answer will be majority of today’s industries were unknown in their current form. Many industries such as automobiles, aviation, health care, and management consulting were unknown or were just beginning to emerge. Now lets look at the industries 3 decades back. Again, multibillion-dollar industries like mutual funds, computers, mobile phones, smart phones, gas based power plants, discount retail, biotechnology, nanotechnology, express parcel delivery, coffee bars, video games, home videos, and CD player and many other such industries were all non-existent in a practical or popular way.

Similarly, lets turn the clock forward a bit and try to look into the future. Lets say after 30 years or say 50 years how many of the now unknown industries will emerge and will exist. If history is any indicator of things to come in future, the answer is there will be many such industries that we cant even think of right now which will emerge.

This is the reality; industries are dynamic. They never remain the same over a long period of time. They change continuously and evolve. The participants, the process, the market and the operations everything changes. Operations improve, markets evolve and grow, and non-customers become customers. History tells us that we have huge potential to change the existing industries and recreate them and not only that it teaches us that we underestimate our capability to create new ones. To have an idea of how dynamic things can get, the 50-year old Standard Industrial Classification (SIC) system, which was published by the U.S. Census, was substituted by the North America Industry Classification Standard (NAICS) system in 1997. The reason being the number of industry sectors that SIC covered were half the number of sectors that actually existed in 1997. The old SIC system covered only 10 industry sectors. The new NAICS system doubled it to twenty sectors to reflect the emergence of new-age industries. For example earlier the service sector included all that is now fragmented into different specialized industries like IT, healthcare, social assistance, etc. Given that these systems are made to ensure stability, continuity and for keeping standards, such a substitution shows the significance of growth of Blue Ocean industries.

Yet the dominant emphasis of strategists has been on competitive strategies also known as red ocean strategies. Part of the explanation for this is that its roots in military strategy heavily influence corporate strategy. Strategy is about fighting different competitors over the same area of land that is constant and not unlimited. Unlike battles though, the history of industry tells us that the universe of market is unlimited and there is a place for everyone; rather, blue oceans have been always in existence. They have continuously been created. To believe and restrict oneself to red ocean is therefore to accept the constraints that are associated with war-limited piece of land and the need to fight and defeat an opponent to succeed-and to reject the unique strength of the business world: the capacity to create new market universe that is uncontested.

Blue Ocean v/s Competitive Strategy (Red Ocean)

Blue Ocean emphasises the importance of value innovation that can completely negate the competition replacing ‘competitive advantage’ with ‘value innovation’ as the firm’s primary goal thus highlighting the importance of creating demand and exploiting untapped maket rather than risking competition.

There is a debate in the academia and research groups as to which strategy is better suited but all evidences are as case studies on different companies which is not enough to define any one of the two strategies as a clear winner. Rather the two strategies co-exist and should co-exist because a firm on the foundation of Blue Ocean strategy may ultimately have to face competition depending on the imitability of the business model and then before they have more value innovation to differentiate themselves and still remain cost competitive, they must also have a competitive strategy to ensure they do not fall behind of competition.

Research results of researchers like Andrew Burke Andres van Stel and Roy Thurik suggest that the notion that blue ocean makes competition irrelevant may not be true.

When combined, the two provide a more holistic and realistic depiction of economic performance. Thus, in real life the any strategy must be adopted after evaluating the business and market circumstances appropriately as these define the degree of scope for effectiveness of either Blue Ocean or competitive strategy. Furthermore, what emphasis and mix should be given to either form of strategy across short and long-term time horizons is apparent in most innovative companies competing in short term red oceans while significant time and resources are devoted to the long-term goal of developing innovation that creates consumer demand and new markets.

Figure 1: Red Ocean v/s Blue Ocean Strategy

Source: www.blueoceanstrategy.corporatestrategy.com

Blue Ocean and White Space

The term white space has been used in business parlance to mean uncharted territory or an underserved market. But as Mark W. Johnson perfectly writes in “Seizing the White Space” the term is the range of potential activities not defined or addressed by the company’s current business model, that is, the opportunities outside its core and beyond its adjacencies that require a different business model to exploit. White space is a subjective valuation: one company’s white space may be another company’s core.

What matters is that it describes activities that lie far outside a firm’s usual way of working and presents a series of unique and perplexing challenges to that organization. It’s an area where, relatively speaking, assumptions are high and knowledge is low, the opposite of conditions in the company’s core space.

The chance to seize a piece of white space presents a tantalizing opportunity. Success here can bring the transformational growth that so many business leaders seek. Yet understandably, a play for the white space feels risky, and often the numbers don’t appear to add up. The market seems too foreign, or core capabilities won’t apply. Some executives, having made one unsuccessful foray, just won’t risk failing again.

Figure 2: White Space

Source: Seizing the White Space, Mark W. Johnson

Blue Ocean Strategy and Applied Concepts
The Strategy Canvas

The strategy canvas is the central diagnostic and action framework for building a compelling blue ocean strategy. The horizontal axis captures the range of factors that the industry competes on and invests in, while the vertical axis captures the offering level that buyers receive across these entire key competing factors.

There are two purposes that are served here:

It captures the current state of play in known market space, which allows users to clearly see the factors that the industry competes on and where the competition currently invests.

Then, it propels users to action by reorienting focus from competitors to alternatives and from customers to non-customers of the industry.

The value curve is the basic component of the strategy canvas. It is a graphic depiction of a company’s relative performance across its industry’s factors of competition. A strong value curve has focus, divergence as well as a compelling tagline.

Figure 3: The Strategy Canvas

Four Action Framework

This framework can also be referred to as the Eliminate-Reduce-Raise-Create Grid. To reconstruct buyer value elements in crafting a new value curve, we use the Four Actions Framework. As shown in the diagram, to break the trade-off between differentiation and low cost and to create a new value curve, the framework poses four key questions to challenge an industry’s strategic logic and business model.

Which of the factors that the industry takes for granted should be eliminated?

Which factors should be reduced well below the industry’s standard?

Which factors should be raised well above the industry’s standard?

Which factors should be created that the industry has never offered?

Figure 4: Four Actions Framework

By pursuing the first two questions managers gain insight into how to drop their cost structure vis-a-vis competitors. Rarely do they systematically set out to eliminate and reduce their investments in factors that an industry competes on. The result is mounting cost structures and complex business models. The other questions provide insights into how to lift buyer value and create new demand. Collectively, they allow exploring how to reconstruct buyer value elements across alternative industries to offer buyers an entirely new experience, while simultaneously keeping your cost structure low. Eliminating and creating are vital as they push companies to go beyond value maximization exercises with existing factors of competition. They prompt companies to change the factors themselves, hence making the existing rules of competition irrelevant.

Plan-Do-Check-Act (PDCA)

The PDCA Cycle is a checklist of the four stages, which one must go through to get from `problem-faced’ to `problem solved’.

This concept was developed by Walter Shewhart, the pioneering statistician who developed statistical process control in the Bell Laboratories in the US during the 1930’s. It was taken up and promoted very effectively from the 1950s on by the famous Quality Management authority, W. Edwards Deming. Consequently, PDCA cycle is also commonly known as `the Shewhart Cycle’ and ‘the Deming wheel’.

This cycle diagram can be applied in team meetings to take stock of what stage improvement initiatives are at, and to choose the appropriate tools to see each stage through to successful completion.

Here is what we do in each stage:

Plan to improve operations first by finding out what things are going wrong (that is identify the problems faced), and come up with ideas for solving these problems.

Do changes designed to solve the problems on a small scale first. This minimizes disruption to routine activity while testing whether the changes will work or not.

Check whether the small scale changes are achieving the desired result or not. Also, continuously Check nominated key activities (regardless of any experimentation going on) to know what the quality of the output is at all times to identify any new problems.

Act to implement changes on a larger scale if it’s successful on small scale. Also Act to involve other persons (other departments, suppliers, or customers) affected by the changes and whose cooperation is needed to implement them on a larger scale.

If the experiment was not successful, skip the Act stage and go back to the Plan stage to come up with some new ideas for solving the problem and go through the cycle again. Plan-Do-Check-Act describes the overall stages of improvement activity, but how is each stage carried out? This is where other specific quality management, or continuous improvement, tools and techniques come into play. The diagram below lists the tools and techniques that can be used to complete each stage of the PDCA Cycle.

Figure 5: PDCA Cycle

VRIO Framework

VRIO is an acronym for Value, Rarity, Imitability and Organization. This is also a 4 questions framework where one asks about a resource or capability to ascertain its competitive potential: the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the resource or capability).

The Question of Value: “Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?”

The Question of Rarity: “Is control of the resource/capability in the hands of a relative few?”

The Question of Imitability: “Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?”

The Question of Organization: “Is the firm organized, ready, and able to exploit the resource/capability?”

The VRIO framework, in a wider scope, is part of a much larger strategic scheme of a firm. The basic strategic process that any firm goes through begins with a vision statement, and continues on through objectives, internal & external analysis, strategic choices (both business-level and corporate-level), and strategic implementation. The firm will hope that this process results in a competitive advantage in the marketplace they operate in. VRIO falls into the internal analysis step of these procedures, but is used as a framework in evaluating just about all resources and capabilities of a firm, regardless of what phase of the strategic model it falls under.

CHAPTER-2 LITERATURE REVIEW
Paper 1:

“Blue Ocean Strategy versus Competitive Strategy: Theory and Evidence.” Burke, Andrew, Andre van Stel, and Roy Thurik. ERIM Report Series Research in Management (May 2009)

Theme: Empirical analysis of blue ocean strategy versus competitive strategies based on data assembled from 655 retail shops through 41 shop types in the retail industry in Holland.

Summary: This paper addresses the debate surrounding Red Ocean (competitive strategy) v/s Blue Ocean (New Market) strategy. The authors note that Blue Ocean seeks to emphasise the importance of value innovation that can completely negate the competition replacing ‘competitive advantage’ with ‘value innovation’ as the firm’s primary goal thus highlighting the importance of creating demand and exploiting untapped maket rather than risking competition. This results in increased profitability in the industry.

There is a debate in the academia and research groups as to which strategy is better suited but all evidences are as case studies on different companies which is not enough to define any one of the two strategies as a clear winner. Rather the two strategies co-exist and should co-exist because a firm on the foundation of Blue Ocean strategy may ultimately have to face competition depending on the imitability of the business model and then before they have more value innovation to differentiate themselves and still remain cost competitive, they must also have a competitive strategy to ensure they do not fall behind of competition.

Research results in this paper suggest that the notion that blue ocean makes competition irrelevant may not be true. To test the superiority of either tools the authors looks at the two strategies from both long term and short term perspectives and outline a theoretical model which suggests that every market will experience new vendors arriving to share the profits that are there on the offering in the industry. Thus the composition of the pie chart of market share will continuously exhibit different set of players with some fading off while others entering the market but only until the saturation point is reached where everyone will break even. Looking at the industry an its players over a period of time in this manner will give us an understanding about whether the new market strategy or the competitive strategy is more viable for the industry. If companies succeed over a long period of time by creating value innovation (new market strategy) as the new companies entered, both the industry profits as well as the firm’s profit will grow steadily and so will the number of vendors in the strategy. On the other hand, if the profitability of the blue ocean firm went down with increasing number of vendors in the industry, it would be an indication of the dominance of the firms that followed competitive strategy over the firms that followed new market (blue ocean) strategy. After studying the complete data from 1982-2000 of 655 retail shops over 41 shop types in the Dutch retail industry and after testing and analyzing the premise the authors concluded for half the shop types, the firm profits were directly proportional to the number of firms while the blue ocean strategy was dominant over a long term with number of vendors and firm profitability rising/falling together over all shop types in the whole period under consideration. The authors also concluded that in short term Red Ocean strategies were at work.

The study highlights that the two strategies co-exist and cross each other throughout the industry life and there is no particular choice that any manager prefers.

Paper 2:

“Synthesizing a Blue Ocean.” Master Thesis. Vester, Daniel. Aalto University, 2012.

Theme: Applicability of New Market strategy frameworks and techniques in the electronic musical instruments industry for innovating new products.

Summary: In this paper, the author targets to show how value innovation could be used in case of an electronic musical instrument company to add value to their product and create new market space. To explain this, he choses to compare the traditional strategies like competitive strategy, Porter’s 5 forces strategy to the blue ocean strategy. Blue ocean strategy is eventually selected for the process of product development of ArturiaMiniBrute, an analogue synthesizer reason being

1) Its attention on constructing new uncontested market space and at the same time targeting lower cost and product differentiation as well; and

2) The ease with which the analytical tools and frameworks in a Blue Ocean strategy could be blended into the product development process and usability of the instrument thus developed.

Blue ocean strategy tools such as the Strategy Canvas, Four Action Framework, Buyer Utility Map and Three Tiers of Noncustomers are applied after quantitative analysis of sales figures in the electronic musical instrument industry for identifying Arturia’s closest competitors in various synthesizer markets and to design the strategy for ArturiaMiniBrute.

The author’s observations and interpretations show that the Blue Ocean Strategy techniques and frameworks can aid electronic musical instrument firms add value to their instruments/products/offerings and create new market space. Subsequently, the author advocates that companies should shift focus from technical features of the musical instrument to the emotional appeal of the musical instrument, and urges that companies should get out of the traditional mindset, challenge established rules of the industry by eliminating factors that have been ignored and not given due importance but which may be of great value to the customer.

Paper 3:

“The Impact of Blue Ocean Strategy in Low-cost Transport.” A tverkova, Hana, Michal A?ervinka, and Vlasta Humlova. In 2012 International Conference on Traffic and Transportation Engineering. Belgrade, November 29-30, 2012.

Theme: Applicability of blue ocean strategy theory to Ryanair (air transport industry)

Summary: This paper illustrates how blue ocean strategy can be vital and have an important influence in the low cost aviation sector. The authors chose to analyze the low-cost air transport industry in the European Union. They report that the market is highly competitive and the regional players fight amongst themselves on the base of cost competitiveness. The authors show that a cordial relationship between regional airports and any carrier firm can enable budget airlines to provide distinguished value for airline passengers at a low cost to the companies. The authors also suggests using the case of Ryanair that infrastructure improvement for non-core activities at the smaller airports might be essential to facilitate such relationships between budget airlines and small regional airports.

CHAPTER-3 EXAMPLES OF BLUE OCEAN STRATEGY
Air Asia
One of the major developments that the airline has experienced has been the evolution of the budget airlines. For instance, emergence of Air Asia in Malaysia is a classic example.

Air Asia have avoided the competitive strategy or the red Ocean (competition against Malaysia Airline and other airlines like Tiger Air, Jet Air and other regional airlines) by considering factors that are important to customers but easily taken for granted by most of the other airlines. With the Four Actions Framework proposed by W. Chan Kim and Renee Mauborgne, Air Asia have ensured they make Malaysia Airline, Tiger Air, Jet air and regional players irrelevant by implementing many important strategic moves explained below.

STRATEGY
Eliminate:

1) OTC booking

2) Seating Class booking arrangement

3) Free breakfast/lunch/dinner on the plane

Reduce:

1) Number of attendants serving on the plane

2) “Luxury” facilities delivered

3) Quality of the seats

Raise:

1) Increased flight hours for their aircrafts: frequency of flight

2) Selected key endpoints/destinations catered frequently

Create:

1) Booking system became online

2) Travel system: point-to-point

Through these strategic moves, Air Asia has been able to concentrate on factors that really matter for the customers like better booking channel, point-to-point travel system, etc. that makes customers’ lives simpler and adds value to them. This is a perfect example of Value Innovation, as not only does this help Air Asia increase the value to the customers but at the same time reduces cost for Air Asia significantly – Value Innovation. This also allows Air Asia towards customers who were not traditionally target thus creating a new market space and targeting non-customers in the traditional airline industry.

Current Airline Customers:

1) Corporates and business fraternity in Malaysia or ASEAN region.

2) Those individuals who can afford to buy expensive airline tickets from airlines like Malaysia Airline and other regional players.

Non-Customers:

1) Officers from the government and other government staff

2) Those individuals who cannot afford to buy expensive tickets such as students or recent graduates or lower middle class and rural people.

With effective execution of Blue Ocean strategy, Air Asia has furthered expanded their gamut and has ventured into other businesses like they started Tune Hotel and Tune Money. The model is again towards creating Blue Ocean market space.

Crocs Inc.
Company Snapshot

Crocs Inc. is one of the major players in shoe industry who have been very successful. It designs, fabricates and markets bright-colored, comfy-branded footwear and accessories for all segments men, women and children.

Blue Ocean Strategic Move

Crocs Inc. with its distinctive lightweight clogs created a blue ocean market space in the shoe industry. These types of shoes gave customers a perfect combination of comfort and fashion at an affordable price point. Crocs shoes have mass appeal because not only are they branded but also in a way they are refreshing, they are different from traditional sandals and casual shoes and add a fun element as well as they come in a wide array of bright colors which provide a funky look. Combined with their new crocodile logo on their shoes it also gives them a bold look. Crocs have been a run-away success also because they provide customer what they never even thought of, they satisfy their customers by adding value to their customers’ usage by giving features like lightweight, waterproof, ergonomic comfort and anti-microbial and anti-skid.

aˆ?Success

Founded in 2002 as a new type of boat shoemaker initially, the company has grown into a global sensation in casual footwear industry with sales across the globe in over 90 countries and reaching 1 billion US dollars in 2011.

Figure 6: Crocs Four Actions to create Value Innovation

Source: Frontier Strategy, LLC

Nintendo’s Wii

The video game business has a huge market and is a multi-billion dollar industry. Video consoles, which form a big portion of this market, were very recently in the past controlled by two major players: PlayStations (PS1&2 and soon PS3) from Sony and Xbox (Xbox and Xbox360) from Microsoft. Nintendo, however, a distant third player created ripples in the market space with its launch of the Wii. This is an especially interesting case study from a strategy perspective since it’s a brilliant example of the so-called blue ocean strategy. The graphic below demonstrates Nintendo’s Wii strategy with the help of the strategy canvas and is quite clear.

Figure 7: The Strategy Canvas of Nintendo Wii

On giving a closer glance to the above graphic, one will notice that Nintendo is competing on a completely different strategic landscape as the attributes are completely differently focused for Nintendo in comparison with Sony and Microsoft. The Wii is not only affordable for general public, it has no Hard Disk, no DVD, no Dolby 5.1, weak connectivity and comparatively low processor speed, but enthralls the user by its innovative motion control stick. The stick is designed such that it integrates the movements of a player directly into the console of the video game, The user gets an interface where he gets a live feel of himself playing in the screen. With this feature Nintendo not only won the existing customers in the video game world but also brought in a completely new set of customers to the business.

We can again think of the Four Actions Framework in all of the above descriptions of features. I will explain here with a couple of those features:

Reduction in cost through elimination of some features like Hard Drive, DVD, Dolby 5.1 and low processor speed

A raise in demand by creation of motion stick: strong value innovation for new gamers/customers.

These 2 features disregard the traditional belief in competitive strategy of either going for cost leadership or product differentiation and not simultaneously for both. In other words, through this example we see that while Sony and Microsoft are fighting in the same old bloody Red Ocean of existent market, Nintendo created a new market space for itself in the form of Wii and is now sailing calmly in this Blue Ocean that it created for itself.

CHAPTER-4 BOS: A Case Study on redBus
Story of redBus

One fine evening an electrical engineer in Bangalore planned to travel to Hyderabad to celebrate Diwali with his family but the answer he got from the agents when he reached at bus stands was that all tickets were sold out and he could inquire about the availability from some other agents. Although the person got frustrated but an appalling question was making rounds in his minds; why weren’t there other methods to get bus tickets booked rather than moving from one agent to another? He questioned why can’t bus tickets be booked online like airlines and railway tickets? The person was Phanindra Sama and his frustration lead way to a revolution in Indian bus industry and redBus was born.

Phani discussed the idea with his friends (Sudhakar Pasupunuri and Charan Padmaraju) and they started working on the idea. Initially they decided to develop an IT based inventory system for bus operators but the idea was dismissed by the operators and agents as the task seemed huge to them. Meanwhile they came in contact with the Bangalore chapter of TIE (The Indus Entrepreneurs) which accepted their venture and mentored the team and guided them with various assignments pertaining to market surveys and market research. The TIE mentorship enabled redBus to get venture capitalist interested in them and a VC named Seedfund funded them with $500000. This is how redBus was born on 18th August 2006, India’s first online bus ticketing website, a concept which was in use for airline and railway booking but no one had realized that it could be feasible enough for the bus travel also. Exhibit 1 gives company details.

Exhibit 1
The Team
Major Milestones
Exhibit 2
Company Details
Bus Ticket Industry- Overview in India

The Indian bus travel industry was highly fragmented with a large number of small operators and agents having very little orientation towards technology. Most of the operators were regional players having small fleets of ten buses where few were long route players having 100 or more fleets of buses. Exhibit 2 gives the details of the industry structure.

Long route buses were known as contract carriages and their tickets were to be bought in advance whereas short haul buses known as stage carriers and their tickets were sold in the coach itself. The booking system was agent driven in which each agent had contract with three of four operators and tickets were allocated to them on the basis of quota system by the operators. Each agent used to sell its quota of tickets and all the unsold tickets were informed to the operator before some fixed time of bus departure. No centralized inventory was maintained by either the agents or by operators

Strategic Management is a term that is not new, first used in the 1970’s it was conceived that a team of strategic planners would come up with strategic ideas to sell to decision makers. It is all about identification and guideline used by the managers in order for the company to have a competitive edge over the competition. Joel Ross & Michael Kami(Fred 2011, 35) mentioned that; Without Strategy, an organization is like a ship without a rudder, going round in circles. It’s like a tramp; it has no place to go.

According to Wheelen and Hunger(2006,3) A set of decisions and actions that are used to charter the performance of a corporation can be defined as Strategic management. The process of this would take into account the scanning of external and internal environmental factors, long term and strategic planning for strategy formulation as well as the implementation and evaluation and control process. Wheelen & Hunger(2006,3) strongly focused on the analyzing and evaluating of external opportunities and threats compared to the company’s strengths and weaknesses. A SWOT (Strength, Weakness, Opportunities and Threats) analysis is an ideal tool for strategic managers to plan for both predictable and unfeasible contingencies.

In the point of Dess and Miller(1993), the combination of three major interrelated activities; strategic analysis, strategic formulation and strategy implementation can be called strategic management. These activities are a continuous process that helps evaluates and controls the company and the industry it is in, benchmarks the competition and set realistic targets and strategies to meet its existing and potential competition.

Lamb(1984) states that strategic management is a continuous process that evaluates and controls the business and industries the company is in; it also assesses the competitors to set goals and strategies then reevaluates them every quarterly or annually to decide on the implementation of the strategy is successful. It then reevaluates the if there is any new factors such as technology, competition, economic market, social, financial and even political environment that can be used to create a new strategy.

As a summary, Strategic Management and Planning is the understanding of the process of strategy formulation, implementation and evaluation. For company an organization to gain the edge over its competition regardless of size, scale; each organization needs to have a well planned strategic management in order to strive and compete in the market while optimizing its potential for tomorrow’s trends of today.

Background of company

The birth of Singapore Airlines was from Malaysian Air Limited where it first started in 1947, because of political reasons, the company was renamed to Malaysia-Singapore Airlines and finally the company split its shares to Malaysian Airlines System and Singapore Airlines in 1972 on which Singapore Airlines is owned by Singapore state owned investment house; Tamasek Holdings

Singapore Airlines was forced to focus on the international market that was subjected to intense competition because there was no domestic route available to after the separation. The difficult start of was one of the factors that drove Singapore Airlines driving spirit to compete and dedication to branding. It started the branding strategy by engaging a French haute-couture designer in 1972 to come up with a special version of the Malay Sarong Kebaya for the airline stewardess uniform and adopting a branding ‘Singapore Girls” that provide top quality in-flight hospitality. This feature became one of the most recognized signatures for Singapore Airlines.

The human resource management area was given a booster with an investment of 20million for its training facilities. With a good marketing strategy and sound backing, the return was shown at 1973 when SA was ranked 3rd for the Asian region. But in 1973 to 1977 period was forced to cut cost due to the surging oil prices. Singapore Airlines joined its operations with British Airways to provide its Concorde services but was terminated in 1980. Even though the collaboration was a failure, it took advantage of the marketing campaign to made itself known around the globe. At the same time, Changi Airport was constructed thus leading the industry to higher service standards. With all that in place Singapore Airlines became the top preferred Airlines for the Asia Pacific region in 1981.

Singapore Airlines experienced a steady growth rate in the 1980s with expansion of its fleet and routes, it was privatized in 1985 and listed in the stock exchange with Tamasek Holdings owning a 63% of the company and was gradually reduced to 54% in 2008. SA underwent changes in the 1990’s with changes made to cater for the lower cost market segmentation as well as the SA engineering focus on increasing productivity and pursuit of better opportunities for business. The globalization in 1990 also made the airline expand overseas as well as investing on other companies. With its strong financial backing, it spend to renovate its fleet, thus giving benefit to the airlines during crisis allowing the airlines to have more bargaining power over its supplier (Scott, 2008) To date, SA group has provided a wide variety of services for the aviation industry from passenger, cargo, terminal, enginnering, training and even tour services as a whole. The airlines operates over 36 countries with weekly flights to them.

Organizational Structure

The organization is divided by function and its disadvantages as the low responsibility of the bottom staff as well as the compartmentalization on its mangers. In order to tackle this, SIA have made their organization chart more flattened with fewer levels of hierarchy in the organization, thus allowing empowerment and creation of a flexible and yet dynamic business that allows its employees to make decisions to leads to job enrichment. SIA also encourages independence and encourages its senior staff to train and low its junior employees to make decisions.

To overcome the job compartmentalization, non technical mangers are rotated on the job and thus allow them to have a better view of the organization for a better picture. The SIA management also stresses for the importance of maintaining a healthy and good work culture. Teamwork and collaboration is placed high on importance by the company.

With the growth of the company and expansion of sales office to over 80 countries, the sales operations have been divided to geographical areas. To overcome the problem of control, the company focuses on the end result objective empowering its site managers to have flexibility and to make adjustments based on the situation. Full power is given to the overseas regional general manager to make decisions and to respond promptly in order to deal with local problems and to customize the operations to suit the local scene.

In general, SIA is slowly decentralizing its organizational structure and it encourages autonomy allowing faster response to the business thus creating opportunities that are vital in the fast and dynamic airline industry.

4.0 Analysis of External Environment
4.1 Political

The political environment of Singapore is stable with its dominant political party People’s Action Party (PAP) controlling the government since the independence. Singapore government has allowed the freedom in corporate governance and has little set restrictions to the industry. Singapore Airlines make 90% of the decision on its own and has only influence the appointment of the director over the company (Sikorski, 1995). Singapore Airlines was allowed to stress on profit in comparison with public or social responsibility and was even backed by the government during its retrenchment practice during the economical crisis. (Sikorski, 1995)

With a strong foreign policy that maintains good relationship with 175 countries, Singapore has a particular good relationship with huge economical countries such as France, United Kingdom, and Germany. It also has a mutual free trade agreement between Japan, Korea, Australia, New Zealand, India, United States of America and recently with China in 2008. With Singapore signing the Gulf Cooperation Council-Singapore Free Trade Agreement in December 2008, it embarks to build strong ties with the middle east countries as well.

Singapore is a stable base for the operations for SIA comparing itself to other regions in the Asia Pacific that have seen unrest over the recent years. Terrorism alerts affected some countries in the Asia region with India(2008) and Pakistan(2009) hit with the lost of hundreds of life. The tourism industry for Thailand was affected in 2008 during the protest and heavy floods as well as the Tsunami event that happened in Langkawi, Malaysia as well as Thailand that affected the influx of tourist there. There was also the riots in China and the Korean Missile crisis that effect the Singapore Airlines to re-route its flight to other locations.

4.2 Economic

Financial Crisis in 2007 affected many countries over the world that brought recessions to most of the affected countries. This slum lasted through 2008 that made the global financial institutions very cautions on its loans of money and many companies had to underwent a cost cutting measure to stay afloat. The IMF predicted the regeneration of the world wide economy by 2009 and it the up market trend has steadily grown from there.

The Singapore Tourism Board (STB) also contributed to promote Singapore as a destination for MICE (Meetings, Incentives, Conventions and Exhibitions). In SGD 90 Million BOOST (Building on Opportunity to Strengthen Tourism) program was launched in February 2009 and was followed up in October with an announcement for a new Tourism Compass 2020 roadmap to grow tourism 2015, with the goal to set Singapore as the leading city for MICE (STB,12 Oct2009). The growth was further spurred by the building of two integrated resort projects, Marina Bay Sand and Resort World at Sentosa. Singapore has also continued to host the Formula One Night Race and with all this factors surely has a positive impact for the travel and tourism sector for the country.

4.3 Social Cultural

Singapore’s population comprises of more then 75% Chinese, followed by Malay and Indian; the main religion of the country is Buddhism, Islam, Christian, Taoism and Hinduism. Having a rich Asian culture in the country, Singapore is one of the most westernized countries within Asia. With the growing China economy and its open door policy; Singapore has landed a great pool of foreign labor arriving from China. This in return has created a cultural conflict among many Singaporeans. With a highly diversified culture with close to 35% of its population is non citizen residing in the country, (25% of is foreigner and 10% are permanent resident); Singapore can be considered as an immigrant country. Although having high non-citizen to citizen ratio, the country never stops to promote foreign talent and believes that if the immigrant policy were to be stopped, Singapore would face a shortage of quality labor.

Having a strong Chinese influence over its working culture that has made it a culture of high in power distance with the lower employees accepting the subordinates positions that seldom questions the managements decisions. The working culture also stresses on good team work and maintaining group harmonies. (Warnstam,2007). This has made Singapore to become a very cooperative employee to employer relationship and its labor union is in good terms with companies throughout.

4.4 Technology

The growth in the usage if Internet around the globe has prompted the growth of customized web addresses to be used around the world. This has also given the potential for the usage of Chinese characters to form the web address (Choe,Oct 2009). With the emergence of such technological advancement, the electronic devices has also evolved to become more portable with increased performance and now almost every household in Singapore would have a portable laptop, hand phone and digital cameras loaded with personalized music, games , photo and video.

The growth of such technology has prompt an expansion of innovation over the past decade. The development of high speed networks and compression has allowed faster transfer of data and transfer rate, resulting in the availability to have high quality real time video conferencing with people around the globe from the office or even without leaving the house. This has made it a very good substitute for companies to use instead of having to send its employees for business travelling. (Yu, 23 Jun 2009).

5.0 Evaluate Current Strategic choice and implications
5.1 Analysis of Current Strategic Position
5.1.1 Financial position

Singapore Airlines has maintained its profit over the years, the group has maintained its profit even through the 2008 financial crisis. After the growth in 2009 the group assets are worth SGD 22.04 million and debt of SGD 1.077million with an equity debt ratio of 0.08. With a general reserve of SGD 11.264 million the company is poised to be able to sustain its operations in any case of crisis. (SIA, Annual report 2012)

5.1.2 Product position

Carrier

RPK

(Million)

SIA

90,128

Cathay Pacific

90,975

Qantas

99,176

Total of AAPA member

550,014

Table 1 Comparison of RPK

Airlines market size can be measure by Revenue Passenger-Kilometer (RPK). Having based in Asia Pacific region, SIA, Cathay Pacific and Qantas all falls into the same category of medium cost, developed airlines. These airlines have similar offering and price level. It can be seen that SIA, Cathay and Qantas have market share of similar size [AAPA, 2009].

The company is ranked number two in Skytrax Best airline award; the airline is in the top five ranking for 10 out of the 12 award Skytrax have. The airline has the Best 1st Class and best in-flight catering award in 2009. The only part the company don’t have a ranking is on the airport lounge service [Skytrax, 2009].

5.1.3 Marketing capability

The initial distribution of SIA is mainly by the travel agents or through internet bookings, SIA has come a long way by providing a ticketless system for its passengers that even allows boarding as well even for connecting flights with its partner airlines (SIA,2009). SIA also engages social networking website in Facebook though quite limited in its presence. This is a drawback with the current trend of younger generation who associates more with social networking sites.

Another factor that is a slight disadvantages for Singapore Airlines is that the domain www.sia.com and www.sia.com.sg is not owned by Singapore Airlines, but to counteract this, they company has engaged to actively publish itself as the preferred search referee if anyone searches for SIA online. SIA has also made good placement in the search engine for using the key world “Singapore airlines” and “Air Ticket Singapore” which prompts SIA at the top of the search list.

5.1.4 Organizational structure

The organization is divided by function and the disadvantages of low responsibility for the employees at the bottom as well as the compartmentalization on the managers. To overcome this, SIA has flat organization chart with few hierarchical levels for its organizations, this enables autonomy and create a more flexible but yet dynamic business that empowers its people to make decisions and lead to better job satisfaction. The promotion of independence and encouraging its senior employees to train and give chances to the junior personnel to make decisions are a key factor for SIA.

Non technical management personnel are rotated on jobs and this gives them to have a broader perspective for the job. This is further strengthening by the stress on the importance of having a good and healthy work culture for the company. Great importance is stressed on having good team spirit.

To overcome sales operation issue, SIA has focused on end results while giving its site managers to exercise flexibility to make necessary changes based on the situations. The full power is given to its overseas regional general manager to ensure fast response time for local issues and a more localized business operation to site the climate. The company focuses on the growth strategy that focuses more on profitability rather than size, thus allowing slow and steady growth with chances for leaders to be groomed properly.

In general, the organisational structure of SIA is decentralise encourages autonomy allowing quick response to business treat and opportunity which is crucial in the airline industry which are very fast and dynamics.

5.1.5 Human Resources

SIA has a strong emphasis on human resources. The requirements for entry level to the company is only for diploma holders are accepted, these employee would then go through the recruitment process. After the appointment, these cabin crew is trained for 15 weeks, 2 times longer the industrial standards. The SIA employees have a 6 month probation that needs to be reported continuously by their supervisor with a confirmation rate of 75% while 20% will be on extension. These trainings are changed periodically to adjust to show the customers expectations. While on the job, the employees are also required to engage in various voluntary community services, arts and cultural activities.

Refresher courses will be available for employees allowing 3 to 4 days per year, this is a form of motivation for the employees to engage in self learning and the employees will be accountable for their own growth and development. Results from these stringent training has been obvious by producing Stewardess that have high esteem, motivated and capable in handling the customers in the company’s best interest (Heracleous and Wirtz. 2009).

The focus on talent form within the company, the company focuses on development of the human capita given training spending of SGD100million for its employees. The company also offers scholarship programs for recruiting management trainees from the universities.

5.1.6 Condition of facilities and equipment

Having one of the newest fleets in the world, with an average age of 6 years, Singapore Airlines is one of the most updated planes compared to the worldwide average of 15 years (Prystay, 28 Aug 2009). By adopting the newest planes and technology this impacts in the reduction of maintenance and petrol cost. Other than that, SIA also went through an upgrading of its plane cabins to provide customers with the most updated entertainment systems and a better seating arrangement.

Training equipment for its pilots is also provided from the SGD 1 million flight simulator that is capable of simulating the high altitude scenario. SIA also updated its training center in 1999 to ensure the recruitment is capable to facilitate a better and efficient training environment.

Overall the airlines does have a great training faclilities for its personnel as well as their commitment to bringing top quality service with a strong financial background but because of the financial crisis in 2008 and the lack of demand over supply, SIA is laden with excess aircraft that has not been utilized.

5.1.7 Past objective and strategies

SIA corporate level uses a diversified strategy whereby it expands its business to airline catering, airport terminal services as well as into aircraft maintenance. These dual strategy in cost leadership and differentiation enables SIA to have excellent cost efficient service through high business efficiency.

SIA has secured its high business competence through the execution of five organizational systems. The first is the structured service development and design that allocates dedicated departments for its enhancement of service and thorough testing to ensure that there will be a quality service that will be able to meet the latest customer’s expectations.

Second is the focus on consumer trends over the years, with a specific department that monitors closely to ensure that innovation is tailor to focus on improving and enabling a cost effective and highly productive service innovation. The focus will also be on the company’s weak point, adapting the best practices from other successful developments while reducing the cost and risk involved for the innovation.

The third set is the focus on a profit conscious culture, with the education of its personnel on the priority of profit and customer satisfaction. SIA also focuses on a reward based system that gives proper recognition to employees based on their performance to encourage team work and productivity while reducing wastage.

The fourth is the goal for the organization to achieve success through the diversification and infrastructure of its subsidiaries. These integration allows the focus and control that will enhance the knowledge while reduction of cost at the same time. The management of its subsidiaries is based on a clear expectation that enables the subsidiaries to be subjected to market discipline.

The last focus for the company is the development of its personnel through training and development while encouraging the development of a direct self continuous learning system to boost their self esteem.

The overall strategies that SIA has adopted has made the company to have a high competence core with the overall ability to achieve a differential offering through exceptional levels of efficiency (Heracleous et al 2009)

6.0 Strategic Potential & Justifications

Choices for strategy for SIA should be based on the logical elements for the process and have a central role. The company should focus their choices of strategy through based on the internal and external factors while taking into account its core competency to strive for profitability and service excellence of its personnel.

Strategic Choices for Singapore Airlines

Business Level Strategy

Corporate Level Strategy

Direction and Method of Development

Strategy for competitive advantage

Adhere to government regulation and satisfaction

Internal training and development

Profit measurable success for strategies

Diversification in market

Creation of value added services to gain competitive advantage

6.1 Business Level Strategy
Price Based Strategy

This strategy takes into consideration of the product to price to gain a competitive advantage. There are many low cost airlines company as of this moment that is conducting business in the Asia region. This causes the market to be very competitive and Singapore Airlines is one of such company that faces challenges. Low cost airline companies such as Air Asia is one of the competitors that are focusing on the usage of price based strategy to capture a market share in the current market.

Justification:
Acceptable and feasible pricing strategy:

The focus for the price based strategy is important as the current completion from the low cost airlines also focuses on the same routes of travel while providing a lower air fare. One of such routes traveled is from Singapore to Bangkok, from this example, Air Asia is selling its seats for a round trip for a price of $150 while compared to SIA that cost $500. Because of this the company is losing money as customer trends are now slowly switching over the low cost seats.

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4.2 Corporate Strategy
Direction Policy Matrix

Used to measure the health of the industry for the Asian regions and the capabilities of Singapore Airlines. Below is the representation of Singapore Airlines in comparative to Air Asia ad MAS in the Asian Region.

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Source: Johnson G, Scholes K. 2005. P 320

Justification:
Acceptability & Feasibility of Directional Policy Matrix

From the analysis it can be seen that the market positing of Singapore Airlines is aimed towards the middle business class strength that offers a highly attractive market. The bargaining power, threats for substitute and competitive rivalry is high for the Singapore Airlines. In the event of a cost increase for jet fuel to USD 115/barrel, the supplier has the upper hand the the treat of substitute is potentially high for the market. For this the feasibility and acceptance of a directional policy matrix for Singapore Airlines is High.

6.3 Directional and Method of Development
TOWS Matrix

Through the analysis of the internal and external environment, the generation of a TOWS based matrix. This will enable Singapore Airlines to focus on the strategic options available to cater for any potential changes or adapt strategies to further strengthen its market share while limiting its weakness.

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Suing the strength and opportunity for Singapore Airlines, there is potential for market diversification. To overcome the potential treats, SIA can have a merger or acquisition with certain airline companies. Avoidance of weakness for Singapore Airlines can adopt a cost leadership strategy. The airlines can develop their internal factors to avoid the treats and weaknesses.

Justification
Diversification:

The current airline industry for the Asian region is highly competitive. There are many airline operations in the region and one of such competition comes from the low cost airline Air Asia. Air Asia flies twice daily from Malaysia to Guangzhou. Currently Air Asia has 86 routes that offers no frills service and has garnered wide recognition from the china market comparing to Singapore Airlines which has 88 destinations in 38 countries. Singapore Airlines would need to strengthen and diversify its market by planning out more feasible routes to high business locations and take a competitive advantage though expansion of the Asian market.

Merger and Acquisition:

Singapore Airlines needs to have a strong understanding on its competition and to avoid the treats they possess. With their strong financial background, the potential for merger and acquisition is a great choice for Singapore Airlines. Currently there are two national carriers that are seeking to limit Singapore Airlines to access their home market thus slowing down the growth for the airline. Because of this Singapore airlines joined the Star Alliance to take advantage of its international strategy. This is also boosted by the investment of SIA groups into China and India to ensure strategic alliances with the local organizations for their cargo divisions, airport services, enginnering and catering.

Internal Development

During the previous years, Singapore Airlines recorded a low asset turnover ration in comparison with its competitors. Because of this, the weaker asset turnover ratio has a potential to show that the companies ineffectiveness to utilize the assets to generate profit and will eventually lead to the decline in the groups growth. Singapore Airlines can adapt to this by using better use of information technology to enhance its services to the customers and gain back better response and efficiency. Singapore Airlines website is now one of the most advance and user friendly in the industry that offers the customers to check their schedules, buy tickets, check in and manage their accounts as well as even choosing the meal for their flights. Because of this value added service, the company is able to further maintain its market share and slowly cover up the losses by creating a portal for customers and potential clients to interact with Singapore Airlines. The efficient use of IT has proven to significantly reduce the cost and enhance service levels for Singapore Airlines.

Conclusion

Singapore Airlines is the national carrier for Singapore and is one of the industry leaders in Asia. Currently the operations route carries Singapore Airlines to South East Asia, East Asia, Europe, Middle East and the Australia. The analysis for the external factors indicates that Singapore Airlines does face some barriers due to the international economic and political sector. The prices of oil over the years have been very volatile and would play a major impact on the profitability of the airline industry. Other than that with some ups and downs in the economy and the growth of high speed networks through the usage of information technology has played an impact for the overall performance in the airline industry in general with people become less mobile while still being able to work with their counterparts across the globe.

The internal factors with the successful branding of Singapore Airlines is one of the drawing factors that is able to sustain its competitive edge as well as with strong management background that ensure a quality of service for its customers gives the company its core competencies. For Singapore Airlines to keep evolving towards the new market trends, the company should take into account the internal and external surroundings.

Fennell defined tourism as … the interrelated system that includes tourists and the associated services that are provided and utilized facilities, attractions, transportation and accommodation to aid in their movement … (Fennell, 1999).

2. Tourism Defined

Tourism, according to the Oxford dictionary, is “the theory and practice of touring or travelling for pleasure”. According to Leiper (1979) the foundations of tourism are thought to have Greek origins, with the term describing a circle, reflecting a key component of tourism, returning to the point of departure (Leiper, 1979: 391). The Leiper’s model which is also known as the basic tourism system is shown in the figure 1.

Figure 1. The Basic Tourism System

Source: Leiper (1995)

Leiper.N. (2004) Tourism Management (3rd Edn) Frenchs Forest: Pearson p.53

A tourist, as defined by the World Tourism Authority is someone who moves away from home on a temporary or short-term basis for at least 24 hours and less than a year, it can be internal movements within a country (domestic tourism) or going to another country (international tourism) (Law, 2002: 2). McIntosh (1977) described tourism “as the science, art and business of attracting and transporting visitors, accommodating them and graciously catering to their needs and wants” (McIntosh and Goeldner, 1977: ix). Today, tourism is one of the world’s largest and fastest expanding industries. In 2010, the overall global tourism export exceeded US$ 1 trillion (World Tourism Organization, 2011). Tourism exports are accountable for 30% of the world’s commercial exports and as a category ranks fourth in size after fuels, chemicals and automotive products (World Tourism Organization, 2011).

2.1 Relationship between Tourism and Transportation

Transport has a direct connection with the tourism industry. Progression in transportation technology has helped a lot to form the modern tourism industry we are evolving today. Since the beginning of time, people have been traveling by various modes. Tourism and transportation are inexorably linked (McIntosh et al, 1995). Without the element of transport there is by definition, no tourism. This means that, although transport contributes for only a part of the tourism business, without it there is no tourism business. However, transport is essential not only to tourism, it is also essential to the economy and indeed to society (Lockwood and Medlik, 2003). For that when we think of tourism we think of people who travels for main purpose of visiting ,that is, a particular place for sightseeing, visiting friends and relatives, taking a vacation and having a good time (Goeldner et al, 2009). These visitors will use all forms of transportation available. Furthermore, tourism is the entire world industry of travel, hotels, transportation, and all other components, including promotion that caters for the needs and wants of travelers (McIntosh et al, 1995). Thus, tourism can be seen as a whole range of individuals, businesses, organizations and places which works together in some way to deliver a travel experience (Leiper, 1979). In accordance with the World Travel and Tourism Council (WTTC), ‘tourism is the world’s largest industry surpassing autos, steel, electronics, and agriculture (McIntosh et al, 1995).

Tourism set off important indirect development effects that improve the quality of life of citizens and enhance a country’s overall economic prospects. Crouch and Ritchie (2000) interestingly summarized (Figure 2) the various factors that together make the attractiveness of a tourist destination experience. Furthermore, they emphasized on the importance of the service infrastructure layer, which includes transport services, in the tourist destination experience. The destination’s general infrastructure services in this category in fact represent one of the most important factors. The tourism phenomenon relies heavily on public utilities and infrastructural support. Tourism planning and development would not be possible without roads, airports, harbors, electricity, sewage, and potable water. The infrastructural dimension is thus a necessary element for tourism development and the factors below are all basic elements for attracting visitors to a destination. Kaul (1985) also recognizes the importance of infrastructure, more specifically transport as an essential component of successful tourism development meaning that it encourages the creation of new attractions and the growth of existing ones.

Figure 2: The tourist destination experience

Source: Crouch and Ritchie (2000)

Transportation considered as one of the four main categories of tourism (transportation, accommodation, food and beverage services and other tourism goods and services). Dwyer and Forsyth, (1993) said that transport activities are fundamental for tourism because they provide the connection between generating and destination regions and the ability for tourists to move around the destination, that is, by making use of inland transportation services. The transport industry is also recognized as a central factor in destination development. Transportations included items such as ships, airplanes, buses, trains, limousines, taxis (Nariida et al, 2009), car traveling, (Rodrigue et al, 2009), cog railroads, aerial tramways, and similar passenger transportation facilities. Any and all of these modes may be relevant for tourism or recreational travel. Recreational facilities can include parks, stadiums, sporting facilities, and beaches. Furthermore, tourism sites are attractions for tourists as well as local residents and may include recreational facilities as well as cultural attractions (such as historical, musical, or educational facilities). Each type of recreational or tourism facility can have special and specific transportation needs (Petraglia and Weisbrod, 2004). Car traveling is usually an independent mean of transport. The driver is the one who decides where, when and how he is going to get to a destination. It is usually cheaper since roads fees are not directly paid but rather from taxes. It is the only transportation mode that does not require transfers, in the sense that the whole journey, from door to door can be achieve without even stopping (Rodrigue et al, 2009). Consumers choose cars based primarily on convenience and comfort (remote door openers, navigation systems, sound systems and cup holders) rather than maximum speed (Litman, 2007). Improving the quality of alternative modes is important for attracting discretionary travelers and therefore reducing traffic problems such as congestion, accidents and pollution emissions (Litman, 2008).

Ships as we know water travel is a major of tourism and contributes considerably to the development of travel as well as airplanes. Airplanes such as (Cathay Pacific, Emirates, Royal Jordanian) providing the seats which an individual traveler, business person or tour operator may purchase. On the other hand, rail travelers worldwide often prefer rail travel, (McIntosh et al, 1995). The operators of high-speed rail services find reliability and punctuality important factors that contribute to higher market shares (Jorritsma, 2009). Recently, train operating companies are delivering acceptable (and contractual) standards of service delivery in terms of information, comfort, cleanliness and quality of service on trains and at stations (Lyons et al, 2011) which are very important elements that tourists will consider in their decision process. High Speed Rail advantages are many, including getting people quickly and comfortably (Kinstlinger, 2009). But in Mauritius since we do not have trains therefore we will not lay much more emphasis on them. Consequently, having adequate taxi, limousine services are essential in a tourist area. Ideally, taxis should have removable and washable seat covers so the car always presents a clean appearance to the passenger. Also the taxi driver to make the best impression should show some courtesy by dismounting from the driver’s seat and open the door for the passenger. He or she should assist his/ her passengers concerning their luggage or any other stuff and be courteous all times. Training taxi drivers in foreign language would ease communication and therefore create more foreign language ability (McIntosh et al, 1995). Usually, it is available 24 hours a day, seven days a week, providing a service to those who may have no other form of transportation. Therefore, Taxi service is a very important source of demand response transportation in many communities (Ridley, 2006). Moreover, buses are the most likely transit mode, which intended for tour use should have large windows, air conditioning, comfortable seats and rest room facilities. Springs or other suspension systems in the coaches should be designed so that the joggling of passenger is kept to a minimum or eliminated. Personnel assigned to buses should be selected for suitable temperament, courtesy and spirit of hospitality (McIntosh et al, 1995). Bus Rapid Transit is considered a more affordable alternative to rail for improving transit service quality and attracting travelers who would otherwise drive on congested urban corridors (VTPI, 2007). Bus organization, bus industry advocates believe that this form of transportation is particularly well suited to certain needs of tourism, especially one way trips of 150 miles or less. Furthermore, rental cars an important aspect of automobile travel is the rental car industry, whose growth has been paralleling or exceeding the growth in air travel. Taxi and Limousine service companies play an increasingly important part in tourism. Local transportation companies perform essential services for airlines in servicing departing and arriving passengers as well as providing similar services for bus, rail, and shipping lines (McIntosh et al, 1995). When taking a look at the position occupied by the various modes of passenger transportation one find that air travel dominates long -distance and middle-distance tourism. The nation’s economy and the tourism industry need a healthy air transportation system. The private automobile dominates for shorter trips and is the most popular means of travel for most domestic journeys. The auto is also very important in regional and international tourism. Affordability, flexibility, and convenience make auto travel the most popular mode of transportation all over the world. Air is the primary competitor to the automobile when it comes to travel, especially for long trips. The advantages of air travel, the quantity of service, speed and comfort must be weighed by travelers against the automobile’s advantages of price and accessibility (McIntosh et al, 1995). But in Mauritius since it is an island, it is mainly accessible from air and the sea, therefore this type of competition does not exist. Furthermore, it is important to consider demand and supply when talking about transportation as they are together forming the transport market (Lockwood and Medlik, 2003). Many of the components of the tourist trip for example, transport and accommodation are demands derived from the consumer’s desire to enjoy what a destination has to offer in terms of things to see and do (Cooper et al, 2008). So, demand and supply are the main components which made up the transportation industry.

2.2 Transport Supply and Demand

It is very important for a country to have the most efficient transport system. Efficiency means to say that the transportation system need to satisfy the transport demand for freight and passengers by using the best systems and the most appropriate balance between public and private transport and between modes of transport (For example; rail or road). The objective is to decrease overall transport costs for the collectively including direct costs (operating costs of the rolling stocks, the costs of infrastructure and the costs of time, security and comfort) and indirect costs (such as noise, pollution, accidents etc.) Transport supply can be defined in terms of infrastructures (capacity), services (frequency) and networks (coverage). Capacity is often assessed in static and dynamic terms the number of passengers, volume (for liquids or containerized traffic), or mass (for freight) that can be transported per unit of time and space is commonly used to quantify transport supply (Rodrigue et al, 2009), and these depend on the four basic elements in any transportation system: the way, the terminal, and the vehicle and motive power (Cooper et al, 2008). Transport demand is expressed as transport needs, even if those needs are satisfied, fully, partially or not at all. Similar to transport supply, it is expressed in terms of number of people, volume, or tons per unit of time and space (Rodrigue et al, 2009), other refers it to the amount of mobility and accessibility people would consume under various conditions (ITE, 2003).

There is a demand for tourism products and demand for alternative non-tourism products (Lockwood and Medlik, 2003). Tourism demand and non-tourism demand will not only determine whether we travel but also which travel mode we choose, should we decide to travel, and indeed which particular service and carrier we choose. Principal among these features, other than physical transplant, are the following: speed, frequency, comfort, safety, availability, user information, access and price. For each mode is dictated by the weakest element in the system (Cooper et al, 2008).

Speed in assessing the value placed, on speed it is important to take account not only of time saved but also of reduced journey time. For most people the ideal is to travel without any perceptible duration of time, not only because it would give up more time for doing other things (including doing nothing) but also because it would remove the many unpleasant aspects of travel that have to be endured when transiting to other places. This mean that we all display a stronger preference for speed and for paying a premium price for speed, than can be explained by the value place on time saved (Lockwood and Medlik, 2003). Transport system performance is often evaluated based on travel speed and distance (Litman, 2008A), some transport system changes intended to increase travel speeds and save travel time tend to reduce other forms of accessibility and increase travel time costs for other users (Victoria Transport Policy Institute, 2011) So, speed is an important feature to consider when taking about transportation as people are limited in time and since lost time cannot be recovered tourists will rather prefer to have a rapid transportation system while visiting a destination.

Frequency is another feature of transport that is to be considered as a good frequency of transport will mean that there is a greater possibility to use transport. But still if a particular route is not profitable there will be an inevitable decrease in the frequency level. Most public service vehicles notably trains, are so large in relation to expected traffic that economic operation can usually be achieved-except on a few high volume routes – only by reducing frequencies to levels that are often unacceptable in the marketplace (Lockwood and Medlik, 2003), and for availability. Service availability trends reflect changes in demand, mileage, taxi fares and to a lesser extent transit fares (Consulting, 2000). Therefore frequency and service availability is mainly based on the demand for transportation.

Comfort, safety and convenience significantly influence transportation decisions. Consumers choosing a motor vehicle are as likely to decide base on seat comfort and the ease of using navigation systems as on more quantitative factors such as speed, price or fuel efficiency (Litman, 2011). Tourists will travel in a mode of transport in respect to the satisfaction the will get from it and here when taking about comfort, the tourists will somehow benchmark the product available in their own countries so as to choose a mode of transport they will prefer to travel in. Prideaux (2000) argued that “if the ability of tourists to travel to preferred destinations is inhibited by inefficiencies in the transport system such as uncompetitive prices or lengthy and uncomfortable journey, the likelihood that they will seek alternative destinations may increase.”

The quality of information can affect the functional availability and desirability of mobility and accessibility options. For example, motorists need actual and appropriate information on travel routes, roadway conditions (such as when congestion, construction and accidents delay traffic), vehicle services, and the availability and price of parking. Potential transit users need information on transit routes, schedules, fares, comfort factors (such as whether vehicles will have seats or stations will have washrooms), and access to destinations. There are many ways to provide transportation information, including maps, brochures, websites and telephones systems (Litman, 2008A). Also Information centers, welcome centers, and information displays are all ways in which visitors can be informed and guided to use appropriate travel routes and transportation facilities (Petraglia and Weisbrod, 2004).

Finally, Price & cost are the final essential elements in transport to consider. As the most price-sensitive user of fuel, airlines are again proving to be the first to suffer. In the case of surface transport, the effects are masked by the unfair taxation which so distorts the market that accurate forecasting requires advance knowledge of how politicians are going to tax as well as subsidize the various competing forms of transport (Lockwood and Medlik, 2003). Price is also a very important feature to consider as tourists will look for competitive prices so as to travel.

Therefore these are the main features that are considered so as to travel, whether it is a tourist or not. These features are considered by anyone who needs to travel and these features will determine the satisfaction of the customer. Customer satisfaction is the aim of any industry as satisfied customers are more economical to an organisation as they not only generate repeat business but they also recommend the service or product to others.

2.3 Service Quality, Customer Perception and Satisfaction

A review of the existing literature indicates a wide variance in the definitions of satisfaction and service quality. The customer could judge the quality a service delivered as ‘good’ but they may not have had satisfaction from the experience (Randall and Senior, 1996). Crompton and Mackay (1989) acknowledged that satisfaction and service quality are not the same thing, stating, ‘Satisfaction is a psychological outcome emerging from an experience, whereas service quality is concerned with the attributes of the service itself.’ Parasuraman et al. (1988) agreed but stated that customers use the same criteria to judge both, as they are interrelated. Customer satisfaction can be experienced in diverse situations and interrelated to both goods and services. It is a highly personal assessment that is greatly affected by customer expectations. Satisfaction also is based on the customer’s experience of both contact with the organization (the “moment of truth” as it is called in business literature) and personal outcomes (Mack and Peter, 1989). Hunt (1977) defines satisfaction as a kind of stepping away from an experience and evaluating it. Oliver (1997) notes that satisfaction is the consumer’s fulfillment response, it is a judgment of a product or service feature, or product or service itself in its ability to provide a pleasurable level of consumption related fulfillment, including levels of under or over fulfillment.

Most of service quality writers have considerable difficulty in understanding how customers judge services. One of the original service quality theories is that customers are satisfied when their judgement of the service they have received (perception) equals or exceeds what they expected:

Customer Satisfaction Equation

Customer Satisfaction (CS) = Perceptions (P) = Expectation (E)

Gap analysis theory (Zeithaml et al., 1990)

Oliver’s expectancy disconfirmation (Anderson Fornell, 1994; Olivier 1997)

2.3.1 Customer Expectation

Zeithaml et al. (1990) considered that the factors that influence customers’ formulation of their expectations are word of mouth, personal experience, external communications and past experience. Parasuraman et al. (1988) tried to set customer expectations to context by suggesting that they are what an organisation ‘should’ offer. So, a customer should expect the product or service to be in a specific standard.

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Figure 3: Basic Perceived Service Quality Model

Based on figure 3, a basic perceived service quality model, we can say that the customers will decide whether they is satisfied by matching their expectation of the service to the perception derived from the service experienced. In an attempt to know the customer satisfaction, we must know ‘what is the perception of the customer’.

2.3.2 Customer Perception

The final part of the customer satisfaction equation is their judgement of the service they have received: their perceptions. Olivier (cited in Taylor, 1997) defined customer perception as ‘a comparison to excellence in service by the customer’. It is often considered that customer perceptions of a service are made at the end of a service encounter. Customer perceptions of a service are a complex series of judgement made during and at the end of the experience but are modified by a range of factors including their mood, importance of the encounter. The tourism and leisure industry has to be aware of these elements, especially when designing methods of receiving feedback from customers. Customer satisfaction therefore needs us to think in a holistic manner by considering various factors that can affect it.

2.4 Transportation services in Mauritius.
2.4.1 Air Transportation

Mauritius is an island and therefore the main access to the island is the air. The Sir Seewoosagur Ramgoolam International Airport, the airport of Mauritius, consists of one runway which cover a distance of over 3,047 m. The airport is situated in plaisance nearly the south of the island. Air Mauritius is the name of the national airline of the island.

Air Mauritius Limited, doing business as Air Mauritius, is the flag carrier of Mauritius. The airline is headquartered at the Air Mauritius Centre in Port Louis, Mauritius. The company is the fourth largest carrier in Sub-Saharan Africa, and has an important standing in the European, African, and Indian Ocean region markets; the airline won the “2011 Indian Ocean Leading Airline Prize”, making it the seventh year in a row for it to win the award. Out of a five-star ranking, the carrier’s inflight service is awarded 3 stars by Skytrax. As of July 2011, the Air Mauritius route network consists of 26 destinations in Africa, Asia, Europe, and Oceania. Shanghai became the 26th destination served by the company in early July 2011. In February 2012, the airline announced the suspension of some non-profitable routes, starting with Milan, Melbourne, and Sydney, effective May 2012.

As of April 2012, Air Mauritius has codeshare agreements with the various following companies, which are the actual operators on the routes specified:

Air France, on the Port Louis-Paris-Port Louis route and on several European routes radiating from Paris

Emirates, on the Port Louis-DubaA?-Port Louis route

Malaysia Airlines, on some routes radiating from Kuala Lumpur

South African Airways, on the Port Louis-Johannesburg-Port Louis route

The Air Mauritius fleet consists of the following equipment, with an average age of 8.8 years:

Mauritius has well organised its air transport so as to reach the markets that it has targeted for the tourism industry development.

2.4.2 Maritime Transport

The Maritime transport in Mauritius is mainly focused on cargoes and merchandising. Tourism is not really at stake when talking about maritime transportation but still there are passenger ships which go to Reunion Island, Rodrigues and also Agalega Island. So these ships take tourists to the island. Cruise ships are another way where tourists can visit the island. The CRO (Central Statistics Office) published statistics for the year 2011 where it can be noted that total arrivals by sea included 29,900 “cruise travellers” (around 14,220 tourists, 5,500 excursionists, 330 Mauritian residents and 9,850 crews) aboard 18 cruise ships, which visited our port during the first nine months of 2011. Therefore we can conclude that there are tourists who travel to Mauritius by sea.

2.4.3 Public Transport

The public transport in Mauritius consists mainly of the buses, the taxis and the car rentals. The most usual way of transport for Mauritian people is the bus. Bus is a quite easy way of transport in the island. The two main bus companies in Mauritius are the NTC (National Transport Corporation) and the UBS (United Bus services). These two companies deserve almost every regions of the island.

Here is a list of all bus companies in Mauritius;

NTC – National Transport Corporation

UBS – United Bus Service

RHT – Rose Hill Transport

TBS – Triolet Bus Service

IO – Individual Operators

MBT – Mauritian Bus Transport

Another way of transport and more comfortable is the taxis. A taxi is a mode of transport that falls between taxis and buses. These vehicles for hire are typically smaller than buses and usually take passengers on a fixed or semi-fixed route without timetables, but instead departing when all seats are filled. They may stop anywhere to pick up or drop off passengers. Often found in developing countries, the vehicles used as share taxis range from four-seat cars to minibuses. They are often owner operated.

Taxis are found in almost every corner of the towns, cities and villages in Mauritius. These taxis are individually owned as there are no taxi companies in Mauritius. In spite of those the taxis are well maintained and very comfortable. Mauritian taxis do not use a taxi meter even if they have it in their taxis, so it is usual here before entering a taxi to decide of the price before. A taxi driver knows usually all the interesting places of the island and therefore can help the tourists to go to a destination.

Car rental can also be a good mode of transport in Mauritius. A car rental agency generally rents automobiles for short periods of time (generally ranging from a few hours to a few weeks) for a fee. In Mauritius it has become quite common to rent cars as various car agencies are offering this service now. Below is a list of car rental agencies that are available in Mauritius;

Avis Rent Car

Ada

ABC Car Rental

Budget Rent A Car

Hertz

Easy Drive Rent A Car

Europcar

National Car Rental

In Mauritius these are the main in – land public transport that is available for the citizens and also for the tourists. There are also some companies like Mauritour and Summertimes who offer small buses on rent to tourists who come to Mauritius and these buses are mainly for tourists.

2.5 Importance of Public transportation and inland transportation.

Khadaroo and Seetanah (2008) link the importance of an effective and accessible transportation system to the length of time any given tourist would stay in one particular area in a destination. They go on to argue that if the ability of a tourist to travel within a preferred destination is hampered by inefficiencies in the transport system, then the tourist, may seek out alternative destinations. In regards to this identification by Khadaroo and Seetanah (2008) transport to and from the airport is viewed as perhaps the most essential element of a tourist city. This linkage plays an important role delivering visitors from the airport to the main area of accommodation, most commonly in the central city. Law (2002) stated that “in the absence of such facilities, as with the city of Florence, it can be a deterrent for potential visitors” (Law, 2002: 71). Public transport and other inland transportation services, like taxi or rented cars, provide an important role in enhancing accessibility to the various tourism attractions within a city. Meanwhile, Khadaroo and Seetanah (2008) noted that inadequate public transport provision in an urban environment can result in limiting the amount of attractions visited, resulting in negative implications on the potential tourism revenue of a city. This inability to derive maximum benefits with an inefficient transport network was also emphasised by Kaul (1985). Kaul recognised that transport plays an important role in the successful creation and development of new tourist attractions within a city and also regarded transport as a catalyst for many city transformations.

Within this recognition was the fact that transport and accessibility were essential for profitable tourist attractions. Leask et al., (2000) also noted the significant connection between tourist attractions and tourism transportation, stating that “transport and tourism have a close relationship due to the need for access” (Leask et al., 2000: 212). In the past accessibility to attractions has been based primarily on access by private modes, however, by not providing public transport connections, the number of visitors that can reach an attraction are consequently reduced. Gimeno and Vita (2006) also recognised that the easier it is made for tourists to travel between points of interest, the visitor gains more ability to participate in activities, which in turn will generate enhanced tourism revenue for the destination (Gimeno and Vita, 2006: 14). When talking about public transportation and inland transportation, we should also think of who are those tourists who will travel in the public transportation services available in a destination. Lew and Mckercher (2006) noted that tourists have access to four basic modes of transport within a destination – personal vehicle, commercial vehicles in organized tours, public transportation and walking. However, conventional public transport system tends to remain majorly inaccessible/ non-preferred mode of transport to tourists for various reasons (Law, 2002): unfamiliarity with the system and the associated risk of entering “terra incognita (unknown territory) should they choose the wrong bus route or get off at the wrong stop” (Lew and Mckercher, 2006: pp. 408), need for negotiation with the staff in local language and a system design optimized to cater to everyday needs of the local population (Lumsdon, 2006; Thompson & Schofield, 2007)

Specialised or custom made tourism transport potentially offers a higher level of accessibility to tourists within the destination. While a large segment of such services is covered under tourist packages offered by private operators, there remains a definitive demand for tourism-specific public transport within the destinations. A large segment of tourists choose not to opt for tourist packages due to lack of flexibility in the choice of both tourist spots and lodging, higher costs and a reduced ‘adventure’ factor. As such intra-destination public transport can become a vital factor in tourists’ choice of destination and their ability to access their nodes of interest within the destination. These types of tourists will use the transportation services available in the destination to travel by themselves. Therefore in this research I will aim at categorizing the tourists who prefer travelling by them and not to choose a ready-made package for their travelling at the destination. Another important facto

This chapter will explain the background of food tourism. The researcher will explain why food tourism is a niche activity and what the benefits of niche tourism are. This chapter will also outline the interaction between food and tourism. Furthermore, the researcher will describe the trends shaping the tourists interest in food. This chapter will then analyse the recognition of food tourism internationally, most notably within countries such as Canada and Whales. Finally, the researcher will investigate the food tourism industry in Ireland and examine how Ireland measures up as a food destination when compared to international standards.

Food tourism, which can also be referred to as gastronomy or culinary tourism is increasing as an area of research among tourism scholars (Hall, Sharples and Mitchell 2003; Smith and Xiao 2008). In 1998, folklorist Lucy Long first defined the relatively new term “food tourism” as “intentional, exploratory participation in the foodways of another – participation including the consumption, preparation and presentation of a food item, cuisine, meal system, or eating style considered to belong to a culinary system not one’s own” (Chrzan 2006; International Culinary Tourism Association 2010; Long 2004). This definition indicates travelling with the intention of experiencing other cultures through their food (Chrzan 2006). However, Smith et al (2008) argue that Long`s definition is exclusive and narrow, limiting food tourism to food experiences belonging to another culture. In contrast to Long`s definition, the International Culinary Tourism Association (ICTA) (2010) define food tourism as “the pursuit of unique and memorable culinary experiences of all kinds, often while travelling, but one can also be a culinary tourist at home”. This definition explains food tourism in its broadest sense and includes all culinary experiences from Michelin star restaurants to local bakeries or cookery schools (Chrzan 2006; ICTA 2010).

Furthermore, the ICTA (2010) explain that local residents can be culinary tourists in their own town simply by breaking their routine and trying out new restaurants. Erik Wolf, President and Chief Executive Officer (CEO) of the ICTA explains that “true culinary tourists are perfectly happy at a roadside cafe in the middle of nowhere, as long as there is something positively memorable about their dining experience” (Wolf 2006, p.2).

2.3 Food Tourism as a Niche Activity

According to Novelli (2005) niche tourism or special interest tourism is one of the fastest growing areas within the tourism sector. Douglas, Douglas and Derrett (2001) concur and believe that the growth of niche tourism is seen as a reflection of the increasing diversity of leisure interests among the twenty-first century tourist. The traditional two week sunbathing holiday abroad has given way to niche tours catering for peoples special interests (Collins 1999). The term niche tourism is largely borrowed from the term niche marketing. In marketing terms, niche refers to two inter-related ideas. “First that there is a place in the market for a product, and second, that there is an audience for this product” (Novelli 2005, p.4). Therefore, the clear premise of a niche market is a more narrowly defined group, whereby the individuals in the group are identifiable by the same specialised needs or interests, and are defined as having a strong desire for the products on offer (Novelli 2005). This can be customised to refer to a specific destination tailored to meet the needs of a particular market segment, for example, a wine growing region can position itself as a niche destination offering tours of its specific wines. The size of a niche market can vary considerably, however it allows the market to be broken into relatively large market sectors – macro-niches; for example cultural, rural or sport tourism which can then be divided into precise market segments – micro-niches, for example geo, food or cycling tourism (Deuschl 2006; Novelli 2005). Niche tourism has been frequently referred to in tourism policy and strategy documents in recent years in opposition to mass tourism (Hall et al 2003; Novelli 2005). “The connotations of a more tailored and individualised service carries its own cachet relating to features like the small scale of operations, implied care and selectivity regarding discerning markets, and a suggested sensitivity of tourists” (Novelli 2005, p.6).

Such features provide a more suitable fit with planning and development policies relating to environmentally sustainable and socially caring tourism. For these reasons, organisations such as the World Tourism Organisation (UNWTO) and the World Travel and Tourism Council (WTTC) view niche tourism consumption as more of a benefit to the host communities when compared to the more traditional forms of mass tourism (Hall et al 2003; Novelli 2005). Furthermore, niche tourism is also seen as a mechanism for attracting high spending tourists. Take for example the concept of cookery school holidays, a market which is expanding year by year (Sharples 2003). Google Insights (2010) show a consistent web search interest in cookery holidays over the years 2004 to 2010, with particular interest from the United Kingdom (UK) and the United States (US). Ballymaloe Cookery School, located in one of the most scenic areas of Ireland, East Cork is one of Europe’s foremost cookery schools. The school which is run by well known cooks Darina and Tim Allen has attracted people of all ages and abilities, from all over the world since it’s opened in 1983. The courses range from simple one (average price a‚¬125) to two day courses (average price a‚¬575), based on a certain theme, such as baking, finger food, salads or pasta dishes, to more lengthy week long courses (at an average price of a‚¬895). An analysis of their website showed that some cookery courses are booked out with an option to join a waiting list (Ballymaloe Cookery School 2010; Sharples 2003).

2.4 The Interaction between Food and Tourism

Although it is agreed that food tourism is a niche activity, Novelli (2005) categorises food tourism as a subset of rural tourism due to its roots in agriculture. Wolf (2006, p.6) contradicts and illustrates food tourism as a subset of cultural tourism because “cuisine is a manifestation of culture”. Everett (2008, p.337) agrees with Wolf and suggests that food tourism provides a “conceptual vehicle for pursuing a more culturally aware tourism agenda”. It can be assumed that food is representative of a culture, take for instance Italy, a country which is known throughout the world for its pizza and pasta dishes. Nevertheless, food tourism is a newly defined niche that intersects and impacts on the long entwined travel and food industries (Wolf 2006). Food is a vital component of the tourism experience. Selwood (2003) suggests that food is one of the most important attractions sought out by tourists in their “craving for new and unforgettable experiences”. A growing body of literature suggests that food can play an important role in the destination choice of tourists’, and more significantly, in visitor satisfaction (McKercher, Okumus and Okumus 2008). The food consumed by tourists in a place is part of the tourists’ memory of their visit to that particular holiday destination (Failte Ireland 2009a; Fitzgibbon 2007). Henderson (2009) explains that food and tourism have a very close relationship as food is a critical tourism resource. Food is vital for physical sustenance and all tourists have to eat when travelling. However, both Henderson (2009) and McKercher et al (2008) declare that the desire to try different foods may act as a primary motivator for some, or part of the bundle of secondary motivators for others. Culinary tourists are drawn by the opportunity to consume, and dining out is a growing form of leisure where meals are consumed not out of necessity but for pleasure (Smith et al 2008). Much of the literature on food tourism refers to the concept of visualism as epitomised by Urry’s “tourist gaze” (Urry (1990) as cited in Everett 2008, p.340). Everett (2008) discovered that viewing windows are being built in food tourism sites in an effort to meet an increasing demand for a more embodied, immersive and authentic food tourism experience. Theses viewing windows bring the producer closer to the consumer and allow the tourist to “gaze” into the “backstage” of food production activity (Everett 2008, p. 340). As previously mentioned, all tourists have to eat when travelling. Therefore, from an economic point of view, 100% of tourists spend money on food at their destination (Wolf 2006). Yet, data on food tourism appears scarce. Selwood (2003, p.178) explains that food is a very much “overlooked and unsung component” of tourism literature. Hall et al (2003, p.1) agree and cite “food, just like tourism, was for many years a fringe academic discipline, and was frowned upon as an area of research by students”. Typically, food is placed together with accommodation in collections of tourism statistics, partly because it is almost always part of another attraction, and also because of it being a necessary element of survival no matter where a person is located (McKercher et al 2008; Selwood 2003). As the ICTA (2010) point out, the more that food is accepted as a main stream attraction by destination marketers, the more research that will be done to further develop and justify this niche activity (ICTA 2010; Wolf 2006). Hashimoto and Telfer (2006) refer to the Canadian Tourism Commission (CTC) who has recognised the growing interest in cuisine and have begun to promote Canada as a food tourism destination. The CTC (2010) highlight local Canadian cuisine as one of the top five unique selling points on offer in the country. Furthermore, dining out is one of the most popular activities undertaken by Canadian tourists (Selwood 2003).

Hashimoto et al (2006) cite that Canada has approximately 63,500 restaurants and Canadians themselves spend CAN$39 billion annually in restaurants, eating out on average 4.7 times a week. The contribution of food to the Canadian tourism economy is of considerable importance and, because of their intensive use of labour, food preparation and food services also contribute very heavily to the tourism employment sector. In Canada, nearly a million people work in the foodservice industry and the promotion of local cuisine is therefore an effective way of supporting local economies along with agricultural production (Hashimoto 2006; Selwood 2003). The importance of food to the tourism industry has increased significantly within the last ten years, according to the Welsh Assembly Government (2009). They believe that the availability of high quality, local food has become a key driver for tourists when selecting a holiday destination. A “Food Tourism Action Plan” has been drawn up to promote Wales as a destination where high quality and distinctive food is widely available. Currently visitors on short breaks in Wales spend 18.7% of their holiday spend on food and drink whereas visitors on longer holidays spend 17.8% (Welsh Assembly Government 2009). Research carried out by the Travel Industry Association in conjunction with the Gourmet Tourism Association and the ICTA reported in March 2007 that over the previous three years 27 million travellers engaged in culinary or wine related activities, while travelling throughout the world. Therefore, the Welsh Government believe that there is a clear demand for culinary experiences, and “outlets which promote and market high quality Welsh food and drink for consumption or purchase” (Welsh Assembly Government 2009, p.3).

2.5 Travel Trends

As previously mentioned, some tourism agencies such as the CTC have begun to recognise the growing interest in food and have embarked on the promotion of their destination as a food tourism location. However, the question arises as to the trends which are shaping the tourists interest in food. Nowadays, modern food tourists are better educated and have travelled more extensively, therefore they are culinary savvy and want to experience individualism as they search for local, fresh and good quality cuisine that reflects the authenticity of the destination (Chon, Pan, Song 2008; Yeoman 2008). Moreover, the influence of the media and the emergence of niche food programmes have influenced the tourism industry as celebrity chefs such as Gordon Ramsey and Jamie Oliver increase our interest in good quality food.

Furthermore, the media is now full of magazines, such as Food & Travel, Intermezzo, Cuisine, Gourmet Traveller, Australian Gourmet Traveller; radio shows and even entire lifestyle channels, such as Good Food or the Food Network which clearly connect food and tourism. In addition, the world is online. Whether through computers or mobile phones people can constantly read and talk about food, nowadays people blog about it, online restaurant reviews are instantly available and Tripadvisor now produce a list of the best places to eat in each country (Yeoman 2008). According to Chon, Pan, Song (2008) travel trends are becoming more activity-interest based rather than destination based. More and more travellers are deciding what activities they want to take part in first and then choosing the destination which offers them. Many of today’s leading destinations offer superb accommodation and attractions, high quality service and facilities and every country claims unique culture and heritage. As a result, the need for destinations to promote a differentiated product is more critical than ever in order to survive within a globally competitive marketplace (Morgan and Pritchard 2005). Food tourism shapes culinary destinations such as France, Italy and California whereas in emerging destinations such as Croatia, Vietnam and Mexico food plays an important part of the overall experience. Food is essential to the tourist experience, it can change the image of a destination, take for example the city of Las Vegas which was a renowned gambling destination where cuisine was barely an afterthought. This changed dramatically in 1992 when Wolfgang Puck became the first “celebrity chef” to come to Las Vegas when he opened Spago at the Caesars Palace Forum Shops. He started a growing culinary revolution in Vegas which paved the way for fine dining restaurants. At present, majority of the hotels and/or casinos in Vegas have celebrity chef restaurants attracting many tourists eager to sample the best cuisine money can buy (Wolfgang Puck 2010). There are currently sixteen Michelin Star restaurants in Las Vegas, with Joel Robuchons Restaurant at the MGM Grand currently holding three Michelin stars (Quezada 2010).

2.6 Food Tourism in Ireland

According to a Mintel report on Ireland, published in 2009, the food tourism market outperformed the overall tourism market between 2003 and 2007, however, neither has been immune to the effects of the global economic slowdown which has caused the value of the food tourism market to decline by 4% in 2008, and the value of the broader tourism market to decline by 3%. The market for food tourism in Ireland was worth a‚¬2.23 billion in 2008. Nonetheless, this figure was a decrease of 4% on 2007 figures and brought an end to a 26% increase between the years 2003 to 2007 (Mintel 2009; Fitzgibbon 2009). According to Tracey Coughlan (2009) from Failte Ireland, the most appealing activities for tourists in Ireland stand as heritage, natural amenities and sports. Sinead O’Leary (2002) agrees and in her study of “Qualitative and quantitative images of Ireland as a tourism destination in France”, French visitors to Ireland were asked to describe their image of Ireland in terms of “common attribute-based components and holistic aspects”. Her findings show that the key images of

Ireland remain the welcoming people, the beautiful scenery and the relaxed pace of life. Unfortunately, food did not get a mention, however, beer; most notably Guinness was cited by 37% of French Tourists as an image which is most readily associated with Ireland. This suggests that food has a lower priority when it comes to the primary purpose of visits and as Coughlan (2009) illustrates this is not just among French tourists. Nevertheless, as demonstrated above, the food tourism market is strong; therefore a gap exists in Ireland for a strategic approach to food tourism and the more demanding culinary tourist. As mentioned in the introduction Failte Ireland proposes to develop a Food Tourism Ireland strategy in the future. However, no report has of yet been published by Failte Ireland in relation to Irelands approach to the development of food tourism. Ireland has a wealth of natural opportunities at its doorstep, for example food festivals, fine artisan producers, food trails, high quality local farmers markets and world class cookery schools such as Ballymaloe Cookery School or Dunbrody Cookery School. It can be assumed that such images of Irish food festivals or Irish farmers markets would be beneficial from a food tourism perspective. Tracey Coughlan of Failte Ireland stated that “The quality of our food ingredients is recognised worldwide as excellent in terms of both quality and authenticity”. “While Irish cuisine may not be as renowned as those of our neighbours on the continent, the strength of our basic ingredients – beef, lamb, and dairy – are a strong selling point”. It is therefore suggested that in these challenging times, continuing to create demand for our tourism product is vital. “Specialist areas like food and annual events like Harvest Feast are very important in this regard” (Failte Ireland 2009). Furthermore, Mintel (2009) report that the quality of food coupled with the availability of local produce are the most influential factors for tourists when choosing somewhere to eat. Mintel (2009) also point out that online reviews and guides such as the Michelin guide, the Michelin Pub Guide, and the Bridgestone Guide can be exceptionally influential on tourists’ choices. However, it must be realised that Ireland face challenges in its task to stimulate further demand from a food tourism perspective. The perception that Irish food is expensive, service related issues (a consistent level of quality is required), Irish food cost issues and the lack of innovation to create new food experiences are of concern (Coughlan 2009). It is therefore suggested that Ireland must build on the success of its food export market and take advantage of its natural opportunities. All the relevant agencies and bodies in Ireland must work together in order to develop a food tourism Ireland strategy which will fully integrate into and support the broader national and regional tourism development objectives.

2.7 Summary

According to the literature, food tourism is increasing as an area of research among tourism scholars. However, data on food tourism is scarce. Although primarily a niche activity with a defined and reachable market, food tourism can have an extensive impact on every holiday experience as all tourists have to eat. This creates a connection between the food source and the food destination, as the food consumed by tourists in a place is part of the tourists’ memory of their visit to that particular holiday destination. As explained, travel trends are becoming more activity-interest based rather than destination based. Furthermore, modern food tourists are better educated and have travelled more extensively. It is apparent from the research that the influence of the media has a major part to play in the recognition of food tourism. Online reviews and guidebooks can be exceptionally influential on tourists’ choices. As demonstrated above, the food tourism market in Ireland is strong, despite the lack of a food tourism strategy. Although some issues arise, overall, Ireland has a wealth of natural opportunities available, all of which could be used for the promotion of food tourism. Some tourism agencies such as the CTC have begun to recognise the growing interest in food and have begun to promote Canada as a food tourism destination. It is evident that the interest in food tourism spans across all age groups and the size of the potential market is large. Further analysis of the culinary tourist will be examined in the next chapter.