MODULE 7: WORKPLACE PRACTICES – PART A
CREDITS: 10
LEVEL: 5
| Graduate Profiles | Learning Outcomes | Assessment |
|---|---|---|
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3. Analyse and evaluate local, national, and international tourism operating environments to facilitate rational decision-making in the tourism industry. |
LO 7.1 Analyse a New Zealand tourism business to determine internal and external factors impacting organisational performance. (5 Cr) |
TTM5 07 Organisational Performance (10 Cr) Case study – SWOT Analysis Event 1 Prepare a SWOT analysis for a New Zealand tourism business. Discuss internal and external factors impacting organisational performance. Identify and discuss strategies to leverage strengths and opportunities for a New Zealand tourism business. |
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4. Develop, analyse, and critique tourism business systems and processes to enable the delivery of a high-quality visitor experience and contribute to overall business effectiveness. |
LO 7.2 Develop strategies that can be applied to drive business growth in a tourism organisation in New Zealand. (5 Cr) |
In business, no one likes to fail – money is lost, livelihoods are threatened, and pride and feelings of self-worth are questioned.
Businesses fail for many reasons – here are just a few.
- Failure to connect and communicate meaningfully and effectively with customers.
- Do you know your customers?
- Do you know what they want and what they are prepared to pay?
- Doing what you always do is not a recipe for success: markets, competition, and technology change.
- Failure to adapt to change may mean the business does not survive.
- Poor management, poor management decisions and failure to have enough cash in reserve
These are all reasons businesses fail.
In this module, we will consider organisational performance and its impact factors. We will also consider Key Performance Indicators (KPIs) and how a business measures performance and discuss ways to improve upon performance. Organisational performance refers to how well an organisation is doing and how well it is meeting its set objectives. Measuring an organisation's performance involves comparing its outputs or results with set objectives.
Set objectives are often referred to as Key Performance Indicators or KPIs. Measuring and evaluating performance tells us how well an organisation is doing – it can also help organisations improve their processes and procedures, identify problem areas, and ensure effective use of organisational resources. Performance can be measured based on the following:
- Operational performance – for example, an evaluation of its marketing, customer service satisfaction, and quality of product.
- Financial performance – for example, an analysis of an organisation’s finances, such as revenue and profit margins, returns on investment, and number of visitors vs. spend per customer.
Explore: Examples of key performance indicators
- Customer satisfaction. Measuring customer satisfaction will help you to evaluate the quality of your service.
- Visitor numbers. It can also be compared with previous years.
- Number of visitors VS average visitor spend. The organisation may charge an entry fee in tourism but hopes to increase visitors' spending by upselling refreshments and souvenirs. EFTPOS systems can help track visitor spending.
- Staff turnover. This KPI can help identify staffing issues. When people leave an organisation, it costs them money through recruitment and selection processes to replace staff, train new staff, and possibly through severance pay.
- Revenue. Analyse which tours or activities generate the most revenue. This may help guide marketing spend for the coming season.
- Media channels. Which media channel generates the most sales?
- Social media analytics can provide direct insight into demographics.
Having regular and consistent reporting is the only way to achieve informed decision-making.
Read the following article about why KPIs are essential for your business.
Organisational performance involves analysing a company’s performance against its objectives and goals. In other words, organisational performance comprises actual results or outputs compared with intended outputs. Is the company doing as well as was planned? Or have the owners been too optimistic, and their forecasts are too high?
The analysis focuses on three primary outcomes: first, shareholder value performance; second, financial performance; and third, market performance.
Click on the headings and links below to develop your understanding of organisational performance.
Shareholders are company owners, technically part-owners if there's more than one. Still, they aren't always involved in the day-to-day running of the business – that duty is left to the directors and company management. However, company directors can also be shareholders.
Shareholder value - this is the ultimate measure of the company’s success. Are the shareholders making money?
Read more about Shareholder Value here.
Financial performance and a return on investment can be characterised as the financial state of a company. Have debts increased or been reduced?
Market performance essentially is whether or not the company has gained or lost its market share. For example, are customers going elsewhere when they would typically frequent a business prior?
Have changes been made to products and boosted sales? If so, how is it going, and if not, why not?
Read more about Financial Performance here.
To set up tourism attractions and activities costs, in terms of financial performance, are the attractions and activities paying their way? Furthermore, in terms of performance, has the tourism business met its planned visitor number projections or have visitor numbers dropped?
In this following article, Reuters discusses how New Zealand's tourism is a real positive for its economy.
Learning Activity: Tourism Business
There are two parts to this activity.
a. Think about the factors that could impact a tourism business's performance.
Next, create a list that includes references to:
- Management
- Departments
- Economic considerations
- Customers
b. Using the factors, consider them according to whether they are internal or external factors.
Post your thoughts on the forum Tourism Business.
Internal Factors
In this section, we are going to spend some time gaining a deeper understanding of internal factors that can influence organisational performance.
Watch this video.
It discusses internal factors that can influence tourism businesses. (11:55)
Reflection
For your own skills development, write down the positive and negative aspects of each factor in the video.
The following chart illustrates the type of elements that constitute internal factors.
Learning Activity: Internal Factors
Firstly, analyse a New Zealand tourism business of your choosing and identify how each factor in the chart above is applied.
(Business suggestions include: Kelly Tarlton’s; Waitomo Caves; Polynesian Spa; and Larnach Castle and Gardens).
Then, access resources such as the company website, industry reports, news articles, and employee review websites and briefly analyse how each factor might influence the company’s performance.
A table in the attached Word document will assist you in this task, however, this is only for guidance on what to post.
Post your findings on the forum Internal Factors.
Reflection
Access the following website. It discusses why organisational culture is important.
For your own skills development, summarise the key points made in this article.
External Factors
You may remember that in Module One, Tourism Operating Environment, subheading 1.2 Global Tourism, we looked at the PESTEL analysis. It is a tool that can scan the business's external environment. Often beyond the organisation's sphere of control, external factors can quickly impact the performance of an organisation. Businesses must constantly be aware of external forces and respond quickly to remain profitable.
The following is a breakdown of PESTEL, with some questions that a business should ask of itself when scanning the external environment.
Questions a business may ask:
- What is the current political climate, and how might it impact our operations or market?
- What are the relevant governmental policies, regulations, or political stability factors that affect our business?
- Are there any upcoming political changes (e.g., elections, policy changes) that might affect our industry or company?
Questions a business may ask:
- What is the current state of the economy, and how might it affect consumer spending or our operation costs?
- Are there any significant economic trends or cycles (e.g., inflation, unemployment rates) that might impact our business?
- How might exchange rate changes, interest rates, or economic growth affect our profitability or market?
Questions a business may ask:
- What cultural, lifestyle, or demographic trends might affect consumer demand for our products or services?
- How might changing societal attitudes (e.g., towards sustainability, health, technology) impact our business?
- How does our business fit within the cultural context, and are there any societal norms or values that we need to consider?
Questions a business may ask:
- What current or upcoming technological advancements might affect our industry or operations?
- How might changes in digital technology, automation, or AI impact our business processes or customer experiences?
- How are we leveraging technology for competitive advantage, and are there areas where we could improve?
Questions a business may ask:
- How do environmental factors like climate change or natural disasters affect our operations or consumer preferences?
- What are the potential impacts of our business on the environment, and how might this affect our reputation or regulatory compliance?
- Are there opportunities to improve our sustainability practices or create more environmentally friendly products or services?
Questions a business may ask:
- What are the current or upcoming changes in laws or regulations that might impact our business (e.g., labour laws, health and safety, data protection)?
- Are there any legal constraints or requirements that we need to factor into our strategic planning?
- How are we ensuring ongoing compliance with relevant legal requirements, and are there any potential legal risks we need to manage?
Watch this video.
Revisit your learning and watch the following video tutorial on external factors that impact the tourism business. (14:21)
Reflection
Write notes on each factor discussed in the video.
In your opinion, which factor has the most significant impact on tourism businesses and why?
For the following statements, identify what element of PESTEL they belong to in this interactive ten-question quiz. Check your answers!
Learning Activity: Tourism Organisation’s Performance
Using the above statements in the interactive quiz, briefly describe how each will impact a tourism organisation’s performance. (The first one has been completed for you).
- A change in national leadership and subsequent policies that affect the regulations within the tourism sector.
Changes in leadership and policies can introduce new regulations or policy shifts, potentially requiring a business to adapt its operations, impacting costs, compliance requirements, and strategic planning.
- The latest innovative mobile apps are transforming the way tourists plan and book their trips.
- A growing trend in society sees more people interested in 'off-the-beaten-track' experiences rather than traditional sightseeing
- Fluctuating currency value could make travelling to or within New Zealand more expensive for tourists.
- New rules require businesses to maintain specific data protection standards.
- Increased awareness and concern about carbon footprints are affecting consumer decisions.
- A shift in population demographics shows a higher proportion of older adults.
- New taxation policies are being implemented, potentially increasing business operating costs.
- The development of high-speed rail networks could alter tourist transportation options.
- Changes in legislation now limit the number of tourists that can visit certain protected areas each year.
Post your responses to the forum Tourism Organisation’s Performance.
Learning Activity: PESTEL (Zorb Rotorua/Sky City Auckland)
You are required to conduct a PESTEL analysis for either Zorb Rotorua or SkyCity Auckland. The choice is yours.
Use the following website to learn more about Zorb Rotorua.
Use the following website to learn more about SkyCity Auckland.
Post your PESTEL analysis of either one of the tourist attractions to the forum PESTEL (Zorb Rotorua/Sky City Auckland).
PESTEL and SWOT Analysis
There are vital differences between PESTEL analysis and SWOT analysis, and each has its strengths and weaknesses.
Remember, we covered SWOT Analysis in Module Two, Marketing in Tourism.
A SWOT analysis looks at a specific business and its internal strengths and weaknesses, along with opportunities and threats. In contrast, a PESTEL is used to scan a business’s external operating environment – it is a macro view of or a more extensive picture of the market in which a business operates.
Watch this video.
It explains how to conduct both SWOT and PESTEL Analysis. (6:50)
The Five Forces model by Porter is a tool that pinpoints and examines five crucial competitive elements that dictate the character of every industry. It assists in revealing an industry's strong and weak areas. This analysis is often utilised to understand the composition of an industry and shape business strategies.
Porter's framework can be used across any economic sector to gauge the intensity of competition in that industry and improve a company's sustainable profitability. This model is attributed to Michael E. Porter, a distinguished professor at the Harvard Business School.
Porter's five forces analysis model is a powerful apparatus for organisations to direct fundamental analysis, particularly industry analysis, yet it isn't the entirety of the organisation's strategy.
Image Source: https://www.edrawmind.com/article/porters-five-forces-analysis-definition-and-examples.html
When applied to various business models, each of these forces can help paint a picture to help us understand why specific industries can achieve and sustain different levels of profitability.
Each element of this model represents a force that can impact an organisation’s ability to operate, such as competition intensity, overall attractiveness, and market profitability. Companies use Porter’s 5 Forces to assess competitors of existing product lines, adjust their competitive strategy accordingly, explore new product ideas, and evaluate investment opportunities.
Watch this video.
It explains more about Porter’s Five Forces. (16:39)
The Five Forces will help you identify overly competitive markets, avoid them, and find competitive advantages where possible. Click on the headings to learn more!
Analyse the following.
- The market share of your top competitors
- The total number of direct competitors
- Any competitive advantage you have (like proximity to suppliers or lower fixed costs).
Analyse the following.
- If you buy significant volume from suppliers
- The consequence of switching costs for you as a buyer.
Analyse the following.
- Your volume of customers
- What percentage of your revenue comes from large-volume customers?
Analyse the following.
- Startup costs and overall capital requirements
- Regulations or other barriers to entry
- Research and development costs.
Analyse the following.
- Direct competition
- What products or services can displace your own.
- Which products should you invest in advertising to strengthen your brand?
- Should you divest (eliminate) any business product line or area?
- Do you have any unique competitive advantages you can take advantage of?
Explore
The website Mindtools has a great explanation of Porter's Five Forces and some good examples for you to read through.
Learning Activity: Porter's Five Forces
Watch this video of the competitive analysis of the airline industry. (4:48)
Then, apply Porter's 5 forces to the Airline Industry.
Present this information in table format explaining your analysis.
Based on your 5 forces what is your conclusion about the Airline Industry?
Post your table to the forum, Porter's Five Forces.
Learning Activity: Porter's Five Forces - Whale watch
Research Whale Watch Kaikoura using the following website.
Now, use the attached table to complete your analysis, incorporating the three questions below. Download an example of what to post in the table here.
- Apply Porter’s Five Forces model to establish the business's challenges by working where it sits on each element.
- Recommend what the business might do to deal with these challenges.
- After completing your analysis of Whale Watch Kaikoura, what overall conclusion have you come to regarding their competitiveness?
For example, a relatively high capital outlay may be needed, but it is not impossible to start up. It has a high compliance, so this could be a barrier. There is some competition, so careful pricing may be necessary, as people may choose to do other things. The business would need a relatively high volume of customers, and the tour is weather-dependent. The Māori cultural aspect may be a competitive advantage.
Post your completed table and a conclusion to the: Porter’s Five Forces – Whale Watch forum.
Remember: SWOT, PESTLE (PESTEL), and Porter's Five Forces, are all competitive analysis frameworks that allow a company to assess their competition, and understand their position in the market, in different ways. A competitive analysis framework is a structured approach used to evaluate and understand their competitive landscape. It involves assessing the strengths and weaknesses of both direct and indirect competitors to gain insights that can inform strategic decision-making.
What is competition in business?
Competition in business is the contest between several firms selling similar goods or services. Different companies attempt to meet the exact consumer needs with their version of a product and, when successful, earn more revenue as people choose to buy their offering. Competitive business environments demand that each firm address consumers' concerns, such as product quality, price, and functionality. These pressures generally result in companies producing innovative products and attempting to offer lower prices, directly benefiting the consumer.
Source: https://www.indeed.com/career-advice/career-development/competition-in-business
Why is competition in business important?
Typically, consumers view competition in business as primarily beneficial to them since they can buy new products at better prices. Competition also leads to several key benefits for businesses themselves. Explore these in more detail by clicking on the headings below.
Businesses produce goods and services, but they're also major consumers, often purchasing a broad array of goods and services to operate. Just as consumers benefit from multiple firms attempting to earn their business, businesses also benefit from being able to shop between multiple service providers and vendors. Responsibly operating a business involves constantly looking for opportunities to cut costs by sourcing materials and services more cheaply. Competition also affects operational costs such as rent. Landlords and property management companies often keep rents lower to keep tenants in their locations.
Businesses benefit from other firms competing to offer them the highest quality materials and services. Since these firms understand their clients require excellent resources to compete in their respective markets, they continuously try to impress them by being reliable suppliers and vendors. Having access to better materials and resources might help your team produce a higher-quality product. For instance, different seafood purveyors constantly approach chefs with their finest quality fish, hoping to earn their business. Chefs depend on access to these exceptional ingredients to create menus better than other restaurants can offer.
In response to competition, organisations often experience greater efficiency. Inside an organisation, the need to be more productive guides companies as they review their processes for inefficiencies, implementing improvements that boost profitability wherever possible. Externally, the vendors they purchase from continue to streamline their services so that it's easier to do business.
For instance, car companies look to increase efficiency by analysing their production processes, vehicle designs and employees' abilities. As they improve these operational areas, they make more cars in less time and can often offer consumers a better product. The vendors that provide them components also compete, trying to quickly and reliably deliver goods in greater quantities, directly supporting the companies' efforts to increase productivity and profit.
When competition drives prices down, consumers have more disposable income. This creates a greater opportunity for businesses to enter markets and earn a share of consumer spending. For instance, when someone shops for groceries with a fixed budget, the less each item costs, the more products the person can buy.
Because competition results in so many product choices, consumers appreciate it when a company offers an exceptional one. This positive consumer sentiment can directly translate to increased demand, encouraging people to purchase. For instance, shoe companies constantly release new editions of their sneaker to remain competitive. When a particular design achieves significant popularity, shoppers may decide to participate in the trend even if they already have enough shoes.
Source: https://www.indeed.com/career-advice/career-development/competition-in-business
Futureproofing a business
Futureproofing is a form of strategic planning that considers the long-term well-being of a company and its mission to promote success for years to come. Different companies will take unique steps to future-proof their brands and prepare for events like global economic shifts and technological advancements. Futureproofing might include committing to a customer-centric, specific mission statement, incorporating new technologies, building solid partnerships, and seeking stakeholder feedback.
Explore
According to the website MasterClass.com, there are five ways to futureproof your business.
These are:
- Collaborate with new brands. You may have a specific need that another company can fulfil, and you may be able to satisfy another company's needs. Mutually beneficial partnerships can expand your reach and expose your offerings to new audiences.
- Find ways to increase retention. Releasing new apps are way to engage audiences and prolong the customer experience life cycle. Subscriptions or necessary upgrades to use certain functionalities make sure customers stay tied to your brand.
- Hire forward-thinking employees. When hiring, consider those with creative outlooks and leadership potential, leading to savvy decisions and long-term success. It is essential to employ forward-thinking team members to challenge the status quo.
- Practice sustainability. Sustainability has become a buzzword for a good reason. Customers care about the ethical sourcing of goods, and a company’s efforts to combat climate change and sustainable practices can also save companies energy and money. Eco-friendly practices make a company more independent and favourable to employees.
- Save money where needed. Automation is appealing because it can save money and increase efficiency. However, many jobs still require a human touch, no matter what technological advancement brings. Know where you can save on costs and where you can maximise a workforce’s skills to stay current with trends and smart with budgeting.
Reflection: Competition and Future-Proofing Business
For your own skills development, summarise the key points made in this article. Think about why competition is good for business.
https://www.nzbizbuysell.co.nz/nz-business/growth/why-competition-is-good-for-business
Then, access the following website.
https://www.nzbizbuysell.co.nz/nz-business/growth/how-to-future-proof-your-business
Summarise the key points made about future-proofing your business.
Once we understand the business and the environment that it operates in, we must then strive to develop strategies that will help grow our business.
Why is growth important? If a business is to succeed, it should strive to achieve more than merely survive. Surviving in business means meeting your financial obligations (such as paying bills) and earning enough profit to make the business worthwhile. However, a significant shift in the market or unexpected events could close your doors for good.
A business that strives for growth is actively innovating and strengthening its market position to have the resources to invest in new products or markets. This makes it more resilient in changing market conditions and increasing competition. Before looking for growth opportunities, it’s essential to understand your current business performance. Conduct a thorough analysis of your financial statements, sales data, and customer feedback to determine your strengths and weaknesses.
This information will provide a solid foundation for making informed decisions about potential growth strategies. You may even notice some gaps you can fill or problems to fix before you consider expanding the existing business.
Methods of identifying growth areas
This section will explore three methods for identifying potential growth areas in a business. These are as follows.
Target market
Definition and Importance:
Gaining a deep understanding of your target market is critical for identifying growth opportunities. Research your ideal customers, their preferences, and pain points, and consider whether your current product or service offerings address their needs. Look for gaps in the market or underserved segments that your business could potentially target.
To analyse your target market, follow these steps:
- Define your target audience: Identify the demographics, psychographics, and behaviours of your target audience. This could include factors such as age, gender, income level, interests, and buying habits.
- Conduct market research: Conduct market research to gain insights into your target market. This could involve surveys, focus groups, or secondary research to gather information about their needs, preferences, and behaviour.
- Analyse your competition: Analyse your competition to understand how they target the same audience. Look for gaps in the market that you can fill or ways to differentiate your product or service from theirs.
- Identify market trends: Identify market trends and changes in consumer behaviour that may impact your target market. This could involve monitoring social media, news outlets, or industry reports to stay current with emerging trends and changes in the market.
- Analyse your data: Analyse your data to gain insights into your target market. Look at sales data, website analytics, and other metrics to understand how your audience interacts with your brand and identify areas for improvement.
- Develop buyer personas: Develop buyer personas to help you better understand your target market. These should be detailed profiles of your ideal customer, including their needs, wants, pain points, and motivations.
By analysing your target market, you can gain insights into their needs and behaviour and develop effective marketing strategies to reach and engage them. By staying up to date with changes in the market and continually analysing your data, you can ensure that you are effectively reaching and engaging your target audience.
Source: https://www.optimiseandgrow.co/how-to-identify-opportunities-for-business-growth/
Gap analysis
Definition and Importance:
Gap analysis is a method of assessing the differences in performance between a business' information systems or software applications to determine whether business requirements are being met and, if not, what steps should be taken to ensure they are met successfully. It can show where a destination or tourism business's offerings fall short of potential or change tourist expectations. For example, if a gap analysis reveals that a destination lacks high-quality budget accommodation options, investing in such options could attract a new segment of budget-conscious travellers, leading to growth.
For example, analyse product or service offerings.
Diversifying your product or service offerings can create new revenue streams and increase your business’s resilience, as can adding complimentary products and services, collaborative partnership offers, and breaking your existing products into new markets. A business owner can identify growth opportunities by reviewing their product or service offerings in the following ways:
- Conduct market research: Conduct market research to identify trends and gaps in the market. Look for opportunities to expand or improve your product or service offerings to meet the changing needs of your customers.
- Analyse customer feedback: Analyse customer feedback to identify areas for improvement in your existing products or services. Use customer surveys or feedback forms to gather opinions and suggestions for improvement.
- Monitor industry trends: Monitor industry trends to identify new product or service opportunities. Stay current with changes in your industry and identify areas where you can innovate or differentiate your offerings.
- Look for complementary products or services: Look for complementary products or services that you can offer to your existing customers. This could involve partnering with other businesses or expanding your product line to offer more comprehensive solutions.
- Identify upsell and cross-sell opportunities: Identify upsell and cross-sell opportunities to increase revenue from your existing customer base. Look for opportunities to bundle products or services or offer upgrades or enhancements.
- Consider new distribution channels: Consider new distribution channels to reach new customers or expand your existing customer base. This could involve selling your products or services online, partnering with other businesses, or opening new physical locations.
Trend analysis
Definition and Importance:
Trend analysis compares business data over time to identify consistent results or trends. You can then develop a strategy to respond to these trends per your business goals. It allows businesses to understand how they perform over time and identify patterns in their performance. By identifying positive trends, a business can work to enhance these areas and grow.
Conversely, by identifying negative trends, a business can work to improve these areas and prevent further losses, aiding in growth.
Keep a close eye on industry trends and the activities of your competitors to spot any growth opportunities you can take advantage of. By looking at their competitors, business owners can identify growth opportunities and develop strategies to remain competitive. A business owner can spot growth opportunities by looking at their competitors in the following ways:
- Conduct a competitive analysis: Conduct a competitive analysis to identify your competitors and analyse their strengths and weaknesses. Look for areas where your competitors excel and consider ways to differentiate your business from theirs.
- Analyse their marketing strategies: Analyse your competitors’ marketing strategies to identify gaps in the market that you can fill. Look for areas where their messaging may not resonate with customers and consider ways to position your business as a better alternative.
- Look for gaps in their product or service offerings: Look for gaps in your competitor’s product or service offerings and consider ways to fill them. Identify areas where your business can provide a better customer experience or offer more comprehensive solutions.
- Consider their pricing strategy: Consider your competitors’ pricing strategy and identify areas where you can offer more value to your customers. Look for ways to differentiate your offerings based on quality, features, or other factors customers may value.
- Monitor their customer reviews: Monitor your competitors’ reviews to gain insights into their strengths and weaknesses. Look for areas where customers may be dissatisfied and consider ways to position your business as a better alternative.
- Identify emerging competitors: Identify emerging competitors in your industry and consider their strengths and weaknesses. Look for ways to differentiate your business from theirs and consider ways to innovate or adopt new technologies to stay ahead of the competition.
You can also discover new business growth opportunities by staying informed about new technologies, emerging markets, and changes in consumer behaviour. By being aware of these shifts, you can identify potential growth opportunities and adapt your business to stay ahead of the competition.
Watch the following videos
Market Segmentation (3:58)
Gap Analysis (2:00)
Use the arrow at the bottom of the slide to progress to the next video.
Learning Activity: Different Marketing Segments
Choose a product or service that everyone uses regularly. Perhaps a hotel, a tourist attraction, or a business. Now, try to differentiate its market based on the characteristics of demographics, geographic, psychographics, and behavioural segments. Once you have determined the market segments, discuss how they present opportunities for the product/service you selected to grow.
A sample answer for a hotel that has conducted market segmentation for insight into areas for growth, is as follows:
Demographics: The hotel could create targeted packages or experiences for each demographic segment. For example, family-friendly amenities or event packages for business travellers.
Geographic: Understanding where guests come from could help the hotel target its marketing more effectively. For example, offering special deals for residents or partnering with travel agencies in countries that many international guests come from.
Psychographics: By understanding the interests and lifestyles of its guests, the hotel could tailor its services and amenities to better meet these interests. For instance, the hotel could offer green initiatives for eco-tourists or wellness packages for health-focused travellers.
Behavioural: Understanding guest booking behaviours could help the hotel manage its inventory and pricing more effectively. For example, offering early-bird discounts to encourage bookings or loyalty programs for frequent guests.
Post your response to the forum, Different Marketing Segments.
A gap analysis is a method where a company assesses its actual performance against its anticipated or target performance. This process aims to discover any deficiencies or areas of improvement in the business, enabling the development of a strategic plan to resolve these issues and enhance operational efficiency.
In this section, we will use the following method to conduct a gap analysis:
Acknowledge your current status: Understand what's happening in your team or organisation right now. For a sales team, this might be about generating leads and converting them into sales. On the other hand, an accounting team might be focused on working effectively and making sure everything is accurate. The measures you choose should relate to what makes your business or team successful.
Set S.M.A.R.T goals for your future: These goals should be specific, measurable, achievable, relevant, and time-bound. Being specific helps remove any confusion about what you're trying to achieve. Goals need to be measurable so you can see progress. They also need to be achievable to keep morale high. Relevant goals will align with the broader company objectives, and having a deadline (time-bound) gives you a set time to check your progress.
Examine the differences between your current and desired states: Now it is time to assess where you're falling short and find the root cause. This might involve identifying issues in recruitment, training, resources, or something else. Your aim here is to discover the source of the problem.
Develop a plan to close the gaps: Consider what needs to happen to reach your goals. This could involve creating action points that help you progress from where you are now to where you want to be.
Source: Forbes.com
Explore
Before you attempt the next Learning Activity, read this article about a restaurant closure.
Learning Activity: SMART goals-CAFÉ
You have been tasked with reviving a failing café, applying the ‘Conducting a Gap Analysis’ methodology you have just read above. Conduct a gap analysis by answering the following:
Remember, to identify the current situation, define what is important!
a. What type of measures might indicate that a café is not performing very well?
b. What do you consider to be the most important aspects of this business for it to become successful?
Now, set S.M.A.R.T Goals!
c. What SMART goals could the café implement to help improve the business?
Examine the difference between current and desired states.
d. Let’s assume the café wants to reduce staff turnover as one of its smart goals, and it has determined that turnover is currently very poor, which is resulting in poor service standards. What types of things might contribute to high staff turnover?
Finally, develop a plan to close the gaps.
e. Based on the things you earlier identified (turnover), what type of actions could the business take to help bridge the gap between where they currently are, and where they want to be?
Post your responses to the forum SMART Goals – CAFÉ.
Reflection
Imagine you are the director of NZST, and you have been tasked with trying to grow its business. This is an excellent example of applying market segmentation and a gap and trend analysis to identify potential areas for growth at NZST.
Market segmentation
- Opening a campus at another location, e.g. Tauranga.
- Attract more international students, e.g. have a prospectus in Chinese.
Gap analysis
- Offer additional qualifications. For example, a higher-level degree and/or another area of study relating to the tourism industry.
Trend analysis
- Offering more classes on campus.
- Increasing the price of the courses.
- Marketing strategy, e.g. major focus on Facebook.
- Provide student accommodation.
A growth strategy is essential for any business, regardless of its size or industry.
Without a solid expansion plan, companies risk stagnation or decline. From startups to large enterprises, a growth strategy helps businesses focus on their goals, target market and sustainable growth.
It is particularly crucial for organisations facing market competition, financial challenges or changing consumer demands. In short, every business that wants to thrive and succeed in the long term requires a growth strategy.
Source: https://kurve.co.uk/blog/what-are-the-4-growth-strategies/
In today's competitive business landscape, achieving growth and success requires strategic planning and implementing effective growth strategies. Now that we have learned the skills to identify areas for growth, it’s time to study some of the different techniques to promote business growth.
Click on the headings to learn more.
This involves selling more of your existing products or services to your current customers. This strategy is often used when a business believes it has a good market share but wants to increase it further.
This is a growth strategy where a business aims to sell its existing products or services into new markets. These new markets could be new geographical areas or new customer segments.
This involves creating new products or services for your existing markets. This strategy may be used when a business sees an opportunity to offer something new to its current customers.
This is a growth strategy for introducing new products or services into new markets. This is typically the riskiest strategy as the business moves into areas with less experience and knowledge.
This involves forming alliances or collaborations with other businesses to reach a wider audience or to offer a broader range of services.
This is a strategy that involves using online platforms and social networks to promote a business, engage with customers and reach a larger audience.
This involves adopting environmentally friendly, socially responsible, and economically viable practices to attract a growing market of conscious travellers.
Explore
For more information, read this article about '10 Growth Strategies that Every Business Owner Should Know'.
Reflection
Refer to the following website about 'How To Grow Your Business, Even When You Have No Idea What You're Doing'.
What tips do they offer for growing your business?
To deepen your understanding of each model, familiarise yourself with the following table.
| Growth Strategy | When to Use | Potential Benefits | Potential Risks |
|---|---|---|---|
| Market Penetration | When the company has a good market share but wants to increase it further. | Increased sales from existing customers; higher market share. | Market saturation could limit growth and possible customer fatigue. |
| Market Development | When a company has a successful product or service that could be attractive to new customer segments. | Reach new customer bases and increase sales. | Requires understanding of new market dynamics, and risk of overexpansion. |
| Product Development | When a company sees an opportunity to offer something new to its current customers. | Can satisfy existing customers' needs better; potential for increased sales. | High development costs; risk of product failure. |
| Diversification | When a company wants to reduce risks associated with its current products or markets. |
Spreads risk across different products/markets; potential for entering lucrative new markets.
|
Diversification can be risky as the company is venturing into unknown markets or products. |
| Partnerships |
When there is an opportunity to collaborate with another business that complements your offerings. |
Access to new customers; shared resources and costs. | Dependence on partner; potential for conflicts. |
| Digital Marketing and Social Media | When a company wants to increase its online visibility and customer engagement. | Broader reach; direct customer interaction; and real-time feedback. | Requires constant monitoring; negative reviews/comments can impact reputation. |
| Sustainability | When a company recognises the need for responsible practices in its operations. |
A positive brand image; appeals to eco-conscious customers, and there are potential cost savings from efficient resource use. |
Initial costs for implementing sustainable practices; possible resistance to change. |
What is the benefit of a growth strategy?
A growth strategy can benefit a business in many ways, some key benefits include:
- Increased Revenue and Profitability: By expanding its customer base, introducing new products or services, or entering new markets, a company can increase its revenue and profitability.
- Competitive Advantage: A growth strategy can help a company gain a competitive advantage over its rivals by differentiating its products or services, accessing new customers or markets, or acquiring new technologies or talents.
- Long-term sustainability: A growth strategy can help a company achieve long-term sustainability by diversifying its revenue streams, mitigating risks, and creating a more resilient business model.
- Attracting Investment: A company with a clear growth strategy can attract investment from venture capitalists, private equity firms, and other investors who are looking for high-growth opportunities.
- Attracting and Retaining Talent: A growth strategy can help a company to attract and retain top talent by providing opportunities for employees to learn, develop new skills and advance in their careers.
- Greater Flexibility and Resilience: By having a growth strategy in place, a company can be better prepared to adapt to market changes and unexpected events, which can help it to be more flexible and resilient.
- Improved Brand Value: Successful execution of growth strategy can improve brand value, which can translate into increased customer loyalty, increased demand for a company's products or services, and improved access to new markets or partners.
Overall, implementing a growth strategy can help a company increase its revenue and profitability, gain a competitive advantage, achieve long-term sustainability, attract investment, and attract and retain top talent.
Learning Activity: Tourism Business
You are to analyse the impact of external factors such as market competition or changes in travel trends on the selection of growth strategies for NZST Travel. The learning activity is broken down into smaller tasks:
Task One: Create a brief profile for a hypothetical Travel and Tourism Company, called NZST Travel. This could include the types of services it offers, its target customers, its current market position, etc.
Task Two: Choose one growth strategy (Market Penetration, Market Development, Product Development, Diversification, Partnerships, Digital Marketing and social media, sustainability) and research how external factors could impact the decision to use this strategy.
As a guide, here are some questions you will want to ask yourself. Note that you do not need to answer all of these; however, they will help guide your efforts.
- What type of services does NZST Travel offer?
- Who are the target customers?
- What is the current market position?
- What growth strategy have I chosen to analyse?
- What are the external factors that could impact the application of this strategy?
- What are this strategy's potential benefits and risks under these external factors?
- How could changes in market competition or travel trends specifically impact this growth strategy?
Place your findings into a Word document and upload them to the External Factors – Tourism Business forum.
