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Hospitality Strategic Management and Marketing Dissertation

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Strategic Management Since Early 1950s

In the early 1950s, budgetary planning as well as control emerged to be the dominant theme in the hospitality industry management. Organizations within the hotel industry used these strategic planning aspects and as such, the hotel industry enjoyed a successful stint.

However, the main issue with these aspects was the financial control. In the early 1950, there was no effective approach to financial control and as such, it was a major challenge for the hospitality industry players. The major tools as well as concepts used in the budgetary control and planning during this time were capital budgeting and financial planning (Deighton 2006, p. 55).

This strategic management aspect had several implications for the management top teams of the hospitality industry players in that; it was the only way that coordination as well as control could be managed and facilitated was through the then established budgeting systems.

1960s to early 1970s

The budgetary panning as and control faded away as the corporate planning emerged to become the dominant theme in the hospitality industry. Budgetary planning and control was not however rendered insignificant. Instead, it was still a vital strategic element.

It was only that top management teams in the hospitality industry ceased its extensive use with the emergence of corporate planning, which became largely practiced by various industries, especially by the players in the hospitality industry (Porter 1979, p. 65). The major drawback that inhibited its usage was the planning of an organizational growth as well as diversification.

This was a major issue and it took a considerable time for hotel businesses to absorb this issue. According to Sasser, Olsen & Wyckoff (2008, p. 76), there were three key concepts as well as tools used in corporate planning by the businesses in the hospitality industry.

They included; forecasting, corporate planning and synergy. The establishment of corporate planning was essential as it is from it that planning departments of a corporate were created.

Between early 1960s and late 1970s, the hospitality industry executives perceived strategic planning as the most effective way in which productivity as well as profitability would be ensured. There was an underlying assumption that everything that was seemingly adding a potential value to the decision making and strategic planning process was subject to measurement.

In addition to this assumption was that after these measurements were subjected to several quantitative models, the results would definitely establish the most efficient strategies for the hospitality industry executives (Self 2003, p. 45).

In the mid 1960s, both Ken Andrews as well as Roland C found out that strategy posed as a tool having significant power as it provided the essential link between different organizational functions in the hospitality industry.

Further, they asserted that strategy played a significant role in assessing the weaknesses as well as strengths of an organization taking the strengths and weaknesses as exhibited by the organization’s competitors into consideration (Self 2003, p. 47).

In the year 1963, McDonalds pioneered a number of strategic approaches and due to the company’s success; these approaches were adopted massively by managers of businesses under hospitality industry. The most common approaches of McDonalds were the experience curve as well as growth market-share matrix.

In the next decade, that is, from 1970 to 1979, executives from all the businesses in the hospitality industry increased their trust with regard to the strategic planning models. The peak of this trust was experienced upon the publication of the article ‘competitive strategy.

Mintzberg views on hospitality industry’s strategic management

Since the introduction of strategic management many years ago, there followed an emergence of several schools of thoughts. According to Mintzberg, Ahlstrand & Lampel (1998, p. 87), strategic management domain is constituted of ten schools of thought. These schools represent; positioning, design, planning, entrepreneurial, power, learning, configuration, cognitive, cultural and environmental thoughts.

Mintzberg, Ahlstrand & Lampel (1998, p. 123) further asserts that positioning, design and planning thoughts are prescriptive in nature and as such, they put more emphasis on the formulation of strategies that arose between the early 1960s to late 1980s. Mintzberg also indicates that the rest thoughts are not intensely prescriptive. They are attributed as putting more emphasis on the manner in which strategies are developed.

However, configuration thought, according to Mintzberg, not only capture but also combines the other nine thoughts and makes the an integrated whole.

Planning school of thought

The design school of thought advocates for there being a fit between the internal capabilities of an entity and the external environment that present opportunities. The school puts an underscore on the importance of an entity with regard to the context in which the entity operates. (Mintzberg, Ahlstrand & Lampel 1998) asserts that the environment is essential as it is referred to while testing the viability of an entity’s strategy.

However, much emphasis should be put on the ways in which an entity structure should be developed in an effort towards supporting the entity’s strategy. According to this school of thought, in the early 1960s, there was a perception that the establishment and implementation of a strategy are two significantly different stages with regard to the strategic management process (Fahey & Narayanan 2006).

Planning school of thought

This school of thought was established in the early 1970s. According to (Mintzberg, Ahlstrand & Lampel 1998), the school conceptualized a strategy such that it included an approach, which is well structured and whose formulation follows a step by step method. In addition to this, the goals pertaining to the strategy were clearly spelled. Further, objectives, which would result to the goals being accomplished, were clearly detailed.

Forecasts as well as scenario analysis made up the environmental analysis. This school of thought came up with a SWOT analysis and integrated it as part of the environmental analysis. As such, SWOT analysis was to give an entity an overview with regard to the factors the entities had to encounter in its line of operations (Shepsle 2009, pp. 140).

In 1973, Mintzberg, Ahlstrand & Lampel (1998, p. 87) established that most top management teams developed tendencies where they focused their efforts in dealing with the unpredictable situations and therefore strategizing in ad hoc, implicit as well as flexible ways. According to him, when a person specializes in a certain task, he becomes an adaptive information manipulator.

He further asserts that such a person prefers to focus on concrete situations. Mintzberg, Ahlstrand & Lampel (1998, p. 87) indicated that a manager thinks and works within a stimulus response kind of an environment and as such, he establishes clear preferences in his work with regard to live action.

Strategic Management since 1980s

The beginning of 1980 saw the emergence of positioning strategic aspect as the dominant theme in the hospitality industry. The positioning theory experienced a widespread acceptance from all the industries but more from the businesses under hospitality industry. However, the establishment of this theory actually occurred in 1969 and was pioneered by Jack Trout though it did not gain popularity.

It was in 1980 when Al Ries and Jack Trout wrote the book “Positioning: The Battle For Your Mind” that positioning theory started being practiced. According to this strategy, the judgment on a strategy should not be passed by focusing only on the internal; factors of a company.

Instead, the judgment should be made by looking at the perceptions of the customer on the strategy with regard to its relativity to competition (Sheppard & Hartwick 2008).

The main issues that were associated with positioning theory were selecting the sectors or the markets where it was applicable and leadership positioning. These posed as threats to the successful strategic management adoption for the businesses in the hospitality industry. The application of the theory was hard to establish and as such, it was perceived as a failure.

However, in the mid 1980s, a different perspective on positioning theory emerged. This perception integrated position theory into management depending on the type of the industry and this proved to be of great help. The key concepts as well as tools that were used in positioning theory were; industry analysis, segmentation, portfolio analysis as well as the experience curve.

However, the majorly used concept was the portfolio analysis. This concept was mostly used in the strategic management of hospitality companies that were considered multi divisional (Porter 1979 p. 65). From portfolio analysis, it was established that a portfolio containing a wide range of financial assets was capable of reducing specific risks in a hotel business.

Late 1980s to 1990s

This period saw the rise of competitive advantage becoming the dominant theme across all industries. However, it was majorly practiced in the hospitality industry. This was derived from the manner in which hospitality businesses competed (Deighton 2006, p. 55). Managers now began focusing on the way in which their companies could establish themselves to achieve a commanding role in the hospitality industry. As such, managers began seeking distinct ways to achieve this. However, the main issue that gave the top management teams related to the focus put on the sources that would give rise to the competitive advantage. Hospitality industry required unique sources and as such, it was a major challenge to the managers (Olsen 1991, p. 45).


In 2000s, strategic innovation emerged as the hospitality industry’s dominant theme. Since its introduction, hospitality business managers and top management teams have been using it to come up with new business models. According to Mintzberg, Ahlstrand & Lampel (1998, p. 43), strategic innovation is market centered.

The main purpose of this strategic management approach was to establish new ways in which value would be created in the hospitality industry. Hotel business managers who exercise strategic innovation can be said to advocating for creativity in their businesses.

However, the main issue with hospitality industry strategic innovativeness was brought about by the size as well as the flexibility ability of an organization. As such, it is difficult to cultivate a culture of innovativeness in a very large hospitality organization.

In this approach, there are several major concepts and tools used and they include; the cooperative strategy, complexity, knowledge management as well as owing standards. The major implications for the managers in the hospitality businesses as described by Knutson & Patton (1991, p. 280) is; alliances and networks; and self organization and virtual organizations.

Olsen views on strategic management

In 2006, a Co alignment concept in the hospitality domain was conceptually established by Olsen. According to him, it was a theoretical framework through which an effective management would become efficient in its operations (Olsen, & case 1995). According to the co-alignment principle, the organizational strategic decisions do align with the forces that exist within the hospitality environment that a hotel business operates in.

He further asserts that the co-alignment is essential as it delineates the organizational activities through which the top management teams establish the economic as well as the social mission of an entity. Further, the co-alignment defines the organizational domain of action while determining the period in which the organization will compete within its domain (Olsen & Zhao 1995).

Fevzi Okumu

According to Fevzi Okumu, the crisis that emerged in turkey in the early 2000s indeed drove the owners of major players in the hospitality industry as well as the managers to perceive the future pessimistically and therefore became reluctant to introduce new investments (Okumus 2004, p. 32).

According to Fevzi Okumu, a strategy’s implementation, whether indirectly or directly, is related to all management facets. This means that the following of a holistic approach in the process of analyzing as well as evaluation of complex issues involved in the implementation process is of significant importance (Okumus 2004, p. 32).

Strategic Management philosophies


Institutionalism is a term commonly used to describe an emphasis on an organization at the expense of other factors.

Manager as visionary

In order to run an organization, it is necessary that a person mandated with the responsibility of running that company to have considerable skills, organizational planning, and knowledge of the principles of administration. According to institutionalism, a good manager must be visionary in order to direct and inspire his team to success.

According to Kotler (2008, p. 55), vision can be described as the ability to see further beyond simple business outcomes as well as solutions. As such, a hospitality business manager should see beyond these two aspects and encourage creativity in his company. A top management team that is visionary makes the atmosphere under which work is performed open.

In addition to this, a visionary hospitality business management creates a work atmosphere such that no employee will raise concerns or complaints (Porter 1980, p. 122). Further, the atmosphere created by the visionary manager ought to be that one where the organization employees are not afraid of suggesting and exercising innovativeness in their work (Sevgin & Jonathan 2004).

A visionary manager, according to institutionalism philosophy, should not be intimidated by challenges or by individuals who is seemingly better in those areas that the top manager shows excellence in. The chances of an organization becoming successful in the hospitality industry depend on the extent to which a visionary manager becomes involved (Scharpf 2007, pp. 146).

Since a visionary manager can see further ahead into the future in a clear way, it follows that the manager can put in place effective plans for his organization in order to meet the future targets in an effective way while still bringing these employees he considers to be not only motivated but also productive along with him (Kotler, 1997, p. 102).

According to Gerloff & Bodensteiner (2001, p. 98), visionary managers are a source of inspiration to their subjects. As such, this kind of a leadership style encourages the employees to work to their optimum. Ultimately, this brings significant success to the company.

Economist philosophy

According to the economist philosophy, there is no way that the top management teams in a hospitality business can devise strategies without making attempts to focus on the future and trying to guess what will be there. These guesses are refined from speculations to a formulation, which is well formulated by the top management teams through forecasting.

Managers ought to exhibit their unique quality by first making a critical assessment of the hospitality environment before coming up with a strategy. Therefore, in identifying the most ideal strategy, it is essential that the hospitality business manager conducts an examination of the strategic situation.

With this regard, the manager should first assess the firm’s general environment while focusing on the political, economic, socio-cultural, technological and the legal factors.

The second step in assessing the strategic situation of a firm is to analyze the industry in which the organization operates. The analysis of the structure of the industry is essential as it is through it that the major forces that seemingly affect competition in the industry are identified.

In addition to this, the analysis identifies the strengths as well as the weaknesses that the organization exhibits relative to the industry in which it operates in.

There are five competitive strategies that were identified by Michael Porter. They include; threat of new entrants, the extent of rivalry among competitors, the threat of substitute products as well as services, buyer’s bargaining power and the suppliers’ bargaining power.

The top management team ought to identify itself in a position from where it can effectively defend itself from the forces of competition or take advantage of those forces to become successful (Sevgin, Nicos & Jonathan 2006).

According to potter, managers have a tendency where they utilize scenario planning to not only prepare but also preempt the likely management hurdles. Scenario planning can be identified as outlining a number of different hypothetical situations and thereby determining the manner in which each situation will be navigated in an effort towards the achievement of the most viable results.

Therefore, if any of the situations arises, the top management team is well equipped with ideas on how to handle the problems or even capitalize on the gains that are likely to be presented with such situations (Kotler 2003, p. 198).

Behaviourist philosophy

Behavioural theory of management is sometimes used to refer to human relation movement because; it focuses on human dimensions of work. Accordion to behavioural theorists, when a manager understands the nature of the behaviour within the workplace, productivity usually improves.

These theorists further assert that the employees should be viewed as individuals as well as assets and as such, they must be developed and worked with. They disregarded the perception held in the past regarding the employees as machines (Peterson 2007, p. 44).

The ultimate dictation of an organization’s success or even failure lies in the hands of an employee. The responsibility of hiring, rewarding, training, motivating and even disciplining the valuable human capital is mandated onto the human resource managers. In order to lead people in an organization, it requires the human resource manager to understand the employees’ behaviour.

In addition to this, he is required to respect the personalities, skills goals as well as the needs of the employees. In human resource management, behavioural theory is majorly used to attempt balancing the vast differences exhibited by the employees and as such, it leads to both productive and efficient working environment.


With regard to behavioural motivations, it is believed that individual values of some employees have offered clues for human resource managers. Values are either instrumental or terminal and as such, depending on the Workgroup of an organization, these values differ.

For instance, executives’ values differ from line workers’ values (Samuel & Bruce 2006). The human resource manager can integrate the value theory in the human management practice in order to help in the interpretation of the needs of the employees and thereby motivating them in the most efficient way (Porter, 1985, p. 321).


It is a trend that human resource managers deal with the emotions of the employees. The emotional theory can be used by the human resource manager in an organization to assist the employees in order to help them get over negative emotions.

Moreover, emotional theory can be used to help the employees to avoid the triggers which are seemingly negative while bolstering positive moods as well as the emotions of the employees (Cox and Koelzer 2004).


The perceptions of an employee concerning what is real and the actual reality differ significantly. Moreover, what an individual perceives as the reality differs significantly with another individual’s perception with regard to the same. The major elements that dictate the direction of an employee’s perception include; values, emotions, personality as well as past experiences.

It is advocated in the behavioral theory, that human resource manager should develop a sense of sensitivity to the present information as well as the prevailing perceptions and therefore making the human resource management practice appear not only factual but also neutral.

Job design

The performance as well as the optimum motivation in an enterprise will always be exhibited by an employee who best fits the job. Human resource managers should advocate for such an instance through job design as a behavioural theory.

In job design, the human resource manager considers such elements as the perceptions and the states of emotions as well as the personal values in order to come up with a job that best fits the series of behaviours of the employees. Alternatively, the human resource manager can find an employee within his organization or even from outside as long as he meets the specified behavioural requirements (Nightingale 1986, p. 55).

Economists and Porter’s theory of differentiation

According to porter, the differentiation strategy is a call to develop a product that seemingly offers distinct characteristics and that those characteristics are of significant values to the customers. Moreover, this value as surpassing the value derived from other products from competitors.

The value derived from the uniqueness of the product allows an organization to distribute the product to the consumers at a premium price while hoping that the premium price will exceed the extra cost incurred in the process of establishing the unique product.

Key definitions of marketing theories

STP concept

STP is a term used mainly to represent three aspects including segmenting, targeting and positioning. STP applies in the marketing management and as such, it is a fundamental concept. According to Bitner & Booms (2006, p. 439), it exists as the initial step during the process of marketing plan development.

The underlying three parts of the concept attempts to optimize both the market saturation as well as the exposure. They do this by focusing on the most essential factors that seemingly cause an impact on the way a product or a service will be received.

Segmentation; this refers to the process by which large target markets are broken down into smaller sub markets constituted of consumers sharing some commonalities.

Targeting; this comes after segmentation. In this process, the abilities of the marketing plan are matched with the consumer needs.

Positioning; this involved positioning the product or service in the market. The basis to which positioning is put includes; the price, end-goal strategy as well as product competition.

Coherence; though not include in the definition, coherence exists as part of STP concept and as such, it is the most vital concept because it provides the basis through which the three concepts are glued together and thereby forming one fluid plan (Harrington 2001, p. 386).

Marketing mix

Marketing mix is used by scholars to define the combination of the marketing elements and the determination of what role each element plays in the promotion of an organization’s product.

Marketing further defines the ways in which these products and services are delivered to the customers. Marketing is commonly known to be constituted of 4Ps which includes; products, price, promotion and place. However, more recently, a fifth P was included to represent the people.

Products; this represents the products as well as the services that are offered to the customers in terms of the physical characteristics of the products, the need that they seek to satisfy, what benefits they offer to the customers and how the products exist as distinct from the ones offered by the competitors.

Price; this refers to the manner in which an organization fix prices on its products to ensure that the price remains competitive while still allowing the company to enjoy significant returns.

Place; this is used to define the regions where the business sells its products as well as services. In addition to this, this P represents the way the organization delivers its products and services to the customers (Child 2002, p. 22).

Promotion; according to Child (2002, p. 23), promotion as used in the marketing mix is the method through which an entity informs the customers about the features as well as the benefits derived from the product or services.

People; this P represents to how the level of the organization’s products, services, skills as well as the skills of the employees can be utilized in an effort towards setting your company distant apart from the competitors.

Theory of branding (Hotel industry Branding)

Branding can be described as a process by which an organization incorporates the use of marketing strategies in order to get the customers easily recall the organization’s products as well as services more than they would do regarding those from the competitors. According to branding theory, it is exercised in the psychology (Scharpf 2007, pp. 134). It is considered as a distinctive skill held by professional markets.

This is because, it is constituted of; the ability to come up with brands and protect the brand among other aspects. With regard to the hospitality industry, every player has a range of options to choose from with regard to the presentation of their brands (Dill 2008, p. 440).

A good example of a well established brand is McDonald. As such, it is a brand established by duplicating itself in the internet. According to Erick, Holly & Meghan (2009, p. 700), a strong player in the hospitality industry has a web presence. This is because; an organization’s web marketing entrance is cost effective and the process involved to enter is simple and easy.

Promotional strategy

A promotion strategy is used to refer to a specific combination of methods used in promotion for a particular product or a series of products. There are several elements associated with promotional mix and as such, they includes; advertising in the form of both the print as well as the broadcast, point of sale displaying, merchandising as well as direct marketing.

Hotels Strategic Marketing

History of Hotels Strategic Marketing

The history of hotel strategic marketing can be categorized into two phases both of which are broad. The first is before globalization, liberalization and privatization that happened between 1898 and 1991. The second category is from liberalization, privatization as well as globalization that occurred from 1992 up to date.

In1982, the hotel industry operational planning was broken down into several strategic areas which included; the company strategy, the product strategy, pricing, marketing mix, annual program plans, closely monitoring the results, marketing strategy, brochure and the consumer.

Each strategy was separated in such a way that it was capable of giving a description on how research could be used to deal with significant problems as well as issues facing the hotel industry. In 1985, the hotel industry introduced a notion where retail business was concentrated on. In the year 1988, players in the hotel industry introduced a strategy whereby a direct response on the marketing solutions was advocated for.

In 1992, hotel companies began targeting to new as well as expanding their ventures. They did this by introducing new products, technologies and services (Philip et al. 2004). Lack of a market history of the hotel businesses hindered these efforts.

In 1997, there was an introduction of retail distribution channels within the hotel industry and as such, these channels involved the sales force management as well as the development of the marketing strategy for the established channels. In the early 2000s, big corporations in the hotel industry began doing internet market planning.

In 2001, there was an establishment of a coherent approach in hotel marketing. The main aim of this was to target both the national as well as international hospitality markets. In 2008, the most dominant theme in the hospitality industry was makeovers as well iconic symbols’ ass re-launching (Philip et al. 2004).

Modern Hotel Marketing

Contemporary hotel marketing significantly differs from the old marketing in that today, there is the use of videos with regard to the online marketing process.

Today’s marketers have established that the use of videos is of significant help as they assist in increasing the recognition of a brand. In addition to this, online videos facilitate the creation of buzz while still assisting in the promotion of and the sale of products as well as services in an effective manner (Ward & Stanley 2000).

In addition to the videos, hotels are making use of social sites such as Facebook and twitter to market their selves as well as their brands. They use these social sites to target customers and to promote their products and services (Ransley & Ingram 2000).

Hotel Industry Branding

According to Margolis & Walsh (2003, p. 302), branding has lately emerged to be a dominant trend in the hospitality industry internationally. According to branding theory, it is exercised in the psychology.

It is considered as a distinctive skill held by professional markets as it is constituted of several aspects which include; the ability to come up with brands, enhance, maintain and protect the brand. With regard to the hospitality industry, every player has a range of options to choose from with regard to the presentation of their brands.

A good example of a well established brand is McDonald. As such, it is a brand established by duplicating itself in the internet. According to Parasuraman & Berry (1993, p. 1407), a strong player in the hospitality industry has a web presence. This is because; an organization’s web marketing entrance is cost effective and the process involved to enter is simple and easy.

Social Media

The hospitality industry is contemporarily being driven by the hotels into using the social media. This is often done by the creation of offline events through the industry’s online audience. Through social networks, personalized communications are enabled. In addition to this, social networks enable the leveraging of friend’s influence and as such, they have become part of big hotel chains’ marketing strategies (Philip et al. 2004).

Summary of the Literature review

Strategic management in the hospitality industry can be traced in the early 1950s. The first sign of strategic management in the hospitality industry during these early times was budgetary planning as well as control emerged.

However, financial control emerges as the challenging factor towards the implementation of this strategy. Thereafter, there emerged other themes which included; corporate planning, competitive advantage and strategic innovation. These here strategic management aspects came after 1980 and in each strategy, there was an issue associated.

Mintzberg played a significant role in the establishment of a viable strategic management. His contributions can be drawn from his views especially in the ten schools of Thought on Strategic management. Others who made significant contributions to strategic management theory included Olsen & Okumus. Olsen is largely attributed to the development of the Co alignment theory.

There are several strategic management theories but the major ones include Economist, Behaviourist and Institutionalism philosophies. Both the economist and the economist theory are essential as it is through these philosophies that differentiation concept is understood.

STP concept, Marketing mix, Theory of branding and Promotional strategy are concepts used in marketing strategy and as such, a person must familiarize with them in order to understand how marketing strategy works.

Contemporarily, the social media has been identified as of significant viability in promoting the brand of a company, especially in the hotel industry. Social media assist in facilitating the online communication between the target customers as well as the company top team management itself. Further, contemporary hotel industry players utilize the internet whereby they upload videos in an effort towards promoting the brand.


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