Decision Making in Hospitality Industry - Essay Example

Critical Examination of future decision issues that the hospitality tourism industry may require to face This essay speaks about problems, problem solving techniques, decision making process and analyzes the future decision issues the hospitality industry may require to face) Table of content Sl. No. Heading Page no. 1. Introduction 3 2. Problems 3 3. Problem solving techniques 4 4. Decision Making 6 5. Process of Decision Making 7 6. Problem solving in Issues the hospitality / tourism industry faces 9 7. Environmental Issues 9 8. Market potential emerging in India and China 11 9. Threat from Terrorism 13 10. Other Issues 14 11. Conclusion 14 12. References 15 13. 14. 15. Introduction In critically analyzing the future decision issues the hospitality / tourism industry may require to face, we have to look about the perceived threats the industry faces in future. We have to analyze the nature of problems, the problem solving process a manager uses and the kind of Dicision needs to be made. Now what is a problem Van Gundy (1988, p3) defines a problem as 'Any situation in which a gap is perceived to exist between what is and what should be'. According to Checkland (1981, p155) 'A problem is a condition characterised by a sense of mismatch, between what is perceived to be actually and what is perceived might become actuality'. According to Kolb (1983, p109) the central characteristics of an organisation is that they are problem solving systems, the success is measured by how efficiently they solve routine problems associated with survival and growth in a changing world. Problems are normally of two types - Hard & Soft problems A hard problem is one which is well defined and structured and one where an outcome is normally predictive. Hard problems can be described as simple, well-defined, bounded and tame. Hard problems are where; the problem is known, objectives are clear, priorities are clear, knowledge base exists, limited people involved and can be treated as a separate matter, none or choice of clear solutions available, easy to measure success, often short term issues are involved and are of limited time scale. Examples of Hard Problems: data Analysis (trend, regression, distribution etc. Queue Modelling, Line balancing (Bottleneck analysis), Decision analysis and decision trees, Project Management techniques, Business modelling and forecasting, Route scheduling and location analysis, Production scheduling, staff scheduling. A soft problem is a problem which is complex in terms of structure, is not well defined, involve the social system: interaction of people and the outcome cannot be predicted. (After Hicks 1991). Soft problems can be described as Complex, unbounded, ill-defined and messy. Soft problems are where the problems are not clear, objectives are not clear, priorities are not clear, many people involved, affects other areas / departments, what to do is not known, difficult to measure success, often medium to long term issues, longer uncertain time scale. Problem solving: O' Loughlin and Mc Fadzeam (1999) suggest several approaches to problem solving: Cognitive Processing Individual Traits - theorists believe that individual perception may influence problem solving performance. Reasoned action perspective - focuses on the relationship between the intended behaviour during the problem solving process and the actual behaviour being observed Decision theory - a process whereby management chooses a solution to the problem from a range of alternatives using quantitative data analysis. Organisational trait - an attempt is made to explain organisational problem solving terms of an organisations physical attributes Group problem solving - in companies problems are solved in groups the result of group thinking. The process of solving hard problems: 1) Data Gathering: Data needs to be gathered on activities, resources, costs and constraints. 2) Generation of Ideas/ Plans: Activities needs to be prioritized. While generating ideas, technology, cost and resource allocations, needs of expert knowledge etc. needs to be considered. The time of completion of the activities are calculated during this process. 3) Solution Finding: Working on the Ideas and Plans generated an optimal route or set of processes for activities are formulated. Decision is made on the set criteria and the results are measured against set objectives. 4) Gathering Acceptance and implementation: At this stage cost/benefit analysis are made and support for the solution are sought. The Process of solving soft problems: 1) Data Gathering: In soft approach the data is gathered mainly from people. 2) Generation of Ideas, Plans: In this process one has to challenge the assumptions and perceptions, has to break the mental habits, to look for similarities among different aspects of the situation and generate as many alternatives as possible. 3) Solution Finding; in this process the decision criteria is defined and he ideas generated earlier are reviewed and improved upon. T The emphasis should be on creativity. 4) Gaining Acceptance and Implementation: At this stage the solution found has to be sold to other stakeholders. It needs initiative and hard selling. The implementation follows. 5) Monitoring and Evaluation: At this stage system and mechanism to monitor and evaluate the result in continuous basis is established. Decision making is central to the organizational activities. The main impetus of a manger's job is decision making. The manager makes decisions for almost every action they take in the way of their daily activities. Some decisions are taken routinely; some decisions are taken after elaborate considerations. The main purpose of decision making for a manager is for achieving the organisations Aims and Objectives. It's their duty to make decisions on how to direct, organise and control the business to make it successful. It's not only about taking decisions himself, the success of a good manager depends how he encourages his subordinates to make decision. Decision making is a complex process involving various stages and events before actual decision is made. The present globalized economic scenario has made decision making a very complex activity. Today a manager not only has to consider the internal needs in decision making, he/she also has to consider various external matters; the industry segment they are in, the national economy, national political scenario, international economy and international political scenario influence the decision making process. These factors are more matter of concern for hospitability industry. For example, the tourist inflow to a particular area not only depends upon the tourist attractions of that particular area, it depends upon the external factors like infrastructure available, political atmosphere of the area and that of the country, Govt. policy and program, the demographic nature of the area, It also depends upon the political scenario of other countries. For example the recent terrorist activities in Bally have substantially affected the tourist industry in whole of south East Asia. The economic development of countries like China and India affected the global tourist destination pattern. Often models are used for decision making. Normative model of Decision Making: In this model the decisions are prescriptive and attempt to provide advices as to how decisions should be made. Descriptive type of decision making: This model of decision making describe or explain how decision making actually works in organisations. It helps in gaining a better understanding of how decision making works in reality. Process of Decision Making: 1) Recognition of the need for a decision: First Phase of decision making is recognition of the need for a decision. The recognition is not a simple process, in reactive approaches the need arises when actions do not meet objectives and or when objectives need to be established. In proactive approaches, the manager perceives a future internal or external threat, where the objectives to be established to meet the perceived threat. In some proactive cases the manager creates new objectives to meet the perceived future goals of the organisation. In this phase the managers should take proactive initiative by constantly probing any potential problem. 2) Identification of the objectives: Right identification of the objectives are the fundamental requirements of a proper decision making process. Proper thought and considerations need to given for proper objectives. This process calls for involvement of all the people affected by the decision, including the people needed for implementation and the people who are recipient of the result of decision making. This process is reflective to all standard problem solving techniques. 3) Search for reasonable alternatives: In this phase a number of alternative solutions are worked out, out of which reasonable alternatives are sorted out, keeping the various organizational and human limitations into consideration. In this phase reasonable thinking and soft approach methodologies are applied. 4) Evaluation of alternatives: In this phase the all reasonable alternatives derived earlier are evaluated by estimating the potential consequences should the decisions be implemented. At this stage harder problem solving methodologies are used along with soft problem solving methodologies. 5) Selection of the best alternative: At this stage the alternatives evaluated earlier are narrowed down to the best using the problem solving techniques with sound management experience. 6) Implement / Evaluate Outcome: The implementation process requires the active involvement of the staff. Evaluation of the outcomes is done during this phase. External constraints for decision making: External constraints affect the decision making process. The external constraints is subdivided into two components (lee et al '99 P6-10): The General External Environment (PEST factors) and specific external environment (where external issues have more specific and direct impact on the operation) Problem solving in Hospitality / Tourism industry: The hospitality industry is facing some serious problems on which the mandarins of the industry have to make decisions. As the hospitality and tourism industry are almost inter-related most of the issues are needed to be tackled jointly. I am giving below three specific issue of which first two; Environmental and threat from terrorism, are more of an issue for hospitality industry whereas the third issue 'the opportunities emerging in China and India' is a more of a tourism issue. Environmental Issues Environmental issue is one of the most serious issues the hospitality industry facing today. We categorise this problem as soft problem, the reasons are: 1) The problem is not clear, we have to identify the problem, and we have only narrowed down it to environmental issues, which is a very big subject. 2) Here we do not have any specified objectives. The issues can be problems and there may some component which can be utilized as opportunity, like branding hotels as 'Total Green', which will give advantage to the business establishments. 3) Priorities are not clear. The process of problem identification and solution finding will give the priorities. 4) It will affect various areas and departments including Govt, policy makers, and other industries. 5) There are no clear cut solutions visible. 6) Measuring the success will be very difficult as it will have a wide spread ramifications, including addressing the threat of Global warming. 7) This is a long term issue Hence we will use soft approach processes to solve this problem. 1) Data Gathering: For Data Gathering, we will contact people and find out the various environmental problems faced by the hospitality Industry. We will contact associations and all the individual units of all the sections of the industry. We will confine our data gathering in UK only. We will ask the respondents to offer their suggestions and probable solutions, we will contact other national associations of the world, for the kind of environmental problem faced by them. 2) Generation of Ideas: In this case our data gathering process itself contains component of generation of ideas, as we have requested the respondents to offer their suggestion and probable solutions. In this stage we can form a group of experts to sift through the suggestion received. The experts also will come out with their own ideas of solutions to the problems. At the end of this phase we will achieve the following: a) A list of environmental problems faced by the industry b) A list of probable solutions sifted through all the ideas received from the respondents and the ideas generated by the experts. c) The action of other countries in solving / attending similar kind of problems. 3) Solution Finding: In this process we will evaluate all the problems and their probable solutions and select a few solutions found to be most likelihood of getting successfully implemented. In this phase we will form a representative committee from all segments of the industry. The committee will decide the best of the solutions from the short listed earlier. 4) Gaining Acceptance & Implementation: We will prepare a brochure giving all the details of the proposed solution and a brief detail of the process adopted in the selection process, justifying the selection of the solution as the best suited. We will take appropriate steps for implementation of the solution, including interaction with Govt. and policy makers, whenever necessary. The implementation process also will include a mechanism of monitoring and evaluation. 5) Monitoring and Evaluation: A committee will be formed for monitoring and evaluation of implementation of the solution, the mechanism of which has already been adopted at implementation stage including communicating the same to each individual unit. Market potential emerging in India and China In a column in Express Hospitality (16-30 November, 2005), 'India and China represent the biggest market potential in Inbound and outbound travel' Andrew Clough, VIP of Development, Hilton International, Middle East and Asia Pacific,1 Let's try to find how this problem is solved by the tourism industry in UK. Firstly we consider it as a hard problems, the reasons are: 1) We know what the problem is, the opportunities arising in the emerging market of China and India. 2) Our objectives are clear - finding out ways to how to utilize the opportunity. 3) Our priorities are clear 4) Knowledge base on the emerging development exists, in the sense that it will be easier to formulate the exact amount of perceived threat. 5) The people involved will be limited, only the individual units affected by this threat. 6) This threat can be treated as separate. 7) Choice of solutions is reasonably clear. 8) The issue is a medium term issue. Hence we will take a hard problem solving approach to solve this problem. 1. Data Gathering: We will gather data from specific sources like foreign office, the trade and commerce sources, country specific sources. From India and China. 2. Generation of Ideas /Plans: A committee will be formed to generate ideas. Once the ideas are ready the plan will be prepared: we will prioritise the activities, like promotional campaign, preparing guidance for the industry using technology, prepare the costing, prepare the resource allocation, calculate duration etc. 3. Solution Finding: Here we decide the optimal route and set the processes of activities. 4. Gaining Acceptance and implementation: We contact the individual units and communicate the guidelines, which has to be implemented by them. Threat from Terrorism Now we will consider one more very important issue the hospitality industry is facing is - Threat from terrorism. In a late 2003 poll conducted on more than 2,300 tourists in Southern California, about what factors were most important in planning vacations or convention, on a scale of 1 to 10 with 10 being he most significant, domestic visitors gave safety an average of 8.9.2 Terrorism has become a real threat for hospitality industry all over the world. It has two pronged effect on hospitality industry. The terrorists find hotels, resort and restaurants as soft target and thus attacking them directly. The expenditure on safety and security to the customers and the property is escalating by the day. It has become a major capital but also recurring expenditure. The indirect effect of terrorism is decrease in tourist flow due to security concern of the tourists. As shown earlier, tourists are showing more and more concern towards security in selecting their place of vacation, conference. We consider this issue as a hard problem. We have considered the points involved and find that a few of the points calls for hard approach and a few of them for soft approach, however the reasons for soft approach looms large :over the reasons for hard approach.. 1. The problem is clear i.e. threat from terrorism - calls for hard approach 2. Objectives are clear i.e., individual security measures to be taken by individual units to face the above threat and influencing Govts concerned - Calls for hard approach 3. Priorities not clear - soft approach 4. A large number of people involved - soft approach 5. Will affect policies and programs of various countries. - soft approach 6. Don't know what to do - soft approach 7. It will be very difficult to measure success - soft approach 8. Long term issue - soft approach We may go in for the problem solving process outlined earlier in decision making process, where a combination of hard and soft approaches is used. The other issues the hospitality / tourism industry will be facing in future can be listed as follows: Globalization issues and emerging of new market in developing countries. New medium of advertisement and promotion Global Political unrest Conclusions The Hospitality and Tourism industry is facing quite a few serious problems; some of them are threat, a few of which can be converted to opportunity. There are issues cropping up which can be termed as opportunity like rapid expansion of tourism. The rapid expansion also needs to be addressed as a problem solving as the industry needs to equip itself with the growth. In developing countries, the growth is occurring so fast that the local industry is not in a position to handle it. There lie opportunities for hospitality and tourism industry mandarins from developed countries to explore the possibilities to open shop there. References Cetron Marvin J, Hospitality in the Age of Terror, http://www.hospitalitynet.org/file/152001642.pdf Clough, Andrew, VP of Development, Hilton International, Middle East and Asia Pacific, 'India and China represent the biggest market potential in Inbound and outbound travel' Express Hospitality (16-30 November, 2005), http://www.expresshospitality.com/20051130/market08.shtml Read More