DQwk2

Terminology:

Champion

Change Theory

Continuous Improvement

Coproduction

Credo

Customer-centric

Direct Competition

General Competition

Indirect Competition

Mission

Problem Statement

Resource Viewpoint

Service Guarantee

Service Mission and Service Vision

Service Process Implementation

Service Strategy

Silo

Strategic Service System

Strategy

SWOT Analysis

Vision

“Failing to plan is planning to fail.”

“Service doesn’t just happen; it must be planned. You need a strategy.”

220 Chapter 11 Strategic Planning for Service

Th is chapter focuses on strategic planning for service. It is divided into three parts:

■ Introduction to Service Strategy

■ Analyzing Position and Market

■ Integration: Implementing a Service Strategy

In the fi rst section, the premise of strategy is introduced as it relates to hospitality

management and a foundation is established. Th e second section discusses the internal

and external evaluations of the SWOT analysis in an eff ort to analyze the position and

the market environment. Th e fi nal section covers writing objectives and implementation

of the strategy.

Introduction to Service Strategy

STRATEGY DEFINED

Th e science of strategy can be quite complex. Numerous books, courses, and even

college majors are devoted to this subject. Consultants and professionals devote

entire careers to the study of the topic. As complex as it may be, it is also a very basic

concept at its roots. Simply put, a strategy is a calculated plan to achieve a common,

chosen objective. Th is defi nition sounds simple. However, each word and phrase has

distinct meaning. Let’s dig more deeply into the three main facets of strategy.

CALCULATED PLAN

We aim to develop a strategy through methodical means, to structure a well-thoughtout

plan with direction. Th is is anything but ad hoc. It involves self-analysis and external

input to make the best possible plan with the information available. Any and all

progress will be monitored and revised as needed.

COMMON, CHOSEN

Th e framework is agreed upon and supported at all levels of the business. Everyone

is made aware of the plan, the direction, and the commitment involved to get to the

objective. Upper-level management supports low-level management and line staff in

all of their eff orts. Everyone is working together.

OBJECTIVE

Th e desired outcome may vary greatly in nature and scope based on the organization

and the goals, but it is always present. Objectives ultimately help to achieve goals.

Most objectives involve a plan for improvement. Some examples of aggressive objectives

include being known as having the absolute best service or gaining market share.

Strategy

A calculated plan to

achieve a common,

chosen objective.

Introduction to Service Strategy 221

Others are to develop a unique characteristic, in order to create a distinction from the

rest of the competition. In bad economic times, a few strategies enable a business to

merely survive a forecasted, unstable economic period. In the end, everyone is working

together, with a plan, in an eff ort to reach a common goal or objective.

STRATEGY IS NATURAL

Strategy is a natural way of thinking. We are all programmed to think strategically

about many things in our lives. We have a want or a need (objective and goal).

Formal or not, we perform research and decide how we will achieve it (plan). We,

and others, agree to follow, support, and monitor the plan and direction (common,

chosen).

For example, a student in this course has an objective to complete it and other

courses so they can graduate from college. Th e goal is to obtain a job, position, or career.

Th e objectives (graduation) are part of a plan to help them reach the goal (job). Th ey

did the research and decided on a college, which courses to take and which professors

to take them with, when to take the courses, and how to balance other priorities to

obtain a degree. Th ey allocated the resources (time, money, and eff ort) and made a plan

to make it happen. Th e objective is graduation. Th e goal is a job. Th e plan (strategy)

makes it happen.

IMPORTANCE OF STRATEGY

Strategy creates many benefi ts to the organization. Strategy is the underlying premise

to delivering quality guest service. Every Fortune 500 company uses strategy. Below

are some of the benefi ts:

■ Increased communication

❍ Planning and monitoring facilitates communication.

❍ Everyone hears about and knows what is happening.

❍ Grapevines and rumors are minimized.

■ Increased understanding

❍ Promotes a deeper understanding between departments.

■ Established common direction

❍ Everyone is working the same way toward the same goal.

■ Increased effi ciency and productivity

■ Ease in decision making

❍ It provides a basis for making decisions.

■ Increased commitment

❍ All are committed to a common purpose.

■ Reduction of stress

■ Reduction of anxiety

■ Awareness of competition

■ Awareness of marketplace

■ Awareness of internal operations

222 Chapter 11 Strategic Planning for Service

LACK OF STRATEGY

Failing to plan is planning to fail.

■ Crisis management: A great manager can fi x problems as they arise.

■ Optimistic management : Just do the best that you can.

■ Mental management : It is all in my head.

Strategy has many pitfalls. Th e wrong approach or lacking in just one aspect could

spell disaster. Some organizations may have a direction, but are not in agreement on how to

proceed. Th e intentions may not be well communicated. Some only have an idea in their head

and don’t see value in outward planning. Some have a plan but are monitoring progress in

their head. Some are reasonably pleased with the current situation and become complacent.

Others see a need for a plan but lack knowledge on how to proceed. Or, worst yet, some are

simply burnt out or lazy. Whatever the reason, a business that fails to plan is planning to fail.

STRATEGY APPLIED TO THE CUSTOMER MINDSET

Consider this. You have a strategy. It leads you to objectives and goals. Your intentions

are well constructed in the procedures and processes. Confl icts arise when processes

and procedures don’t meet the demands of the customers. Suppose the customer

arrives at 9 a.m., exhausted from an international fl ight. Th ey only have sleep on their

mind. You follow the process. You tell them that check-in is at 3 p.m. and off er to

hold their bags. Now you have a process and they have a process. Th eir timing isn’t

always your timing. Why should the customer have to pay you to accommodate to

your ways? If you truly care about the customer, a process should accommodate these

instances if at all possible. Th is doesn’t mean giving away the hotel, but processes

shouldn’t be so formal that they confl ict with the customers needs.

CONTINUOUS IMPROVEMENT

Th e hospitality industry is very dynamic—technology changes, expectations change,

economic conditions change, and the marketplace changes, so companies must always

be on their toes and be ready to identify areas in need of improvement or change. As

these areas are outlined, care must be taken to prioritize objectives. In order to maximize

the return on available resources, there should be a structure in place for planning,

executing, and monitoring, then revising, executing, and monitoring again.

Continuous improvement (see Figure 11.1 ) is an essential premise of instituting

quality. It is a cycle of planning, monitoring, interpreting, and revising in a constant

eff ort to improve something. Th e hospitality industry is very dynamic— technology

changes, expectations change, economic conditions change, and the marketplace

changes, so companies must always be on their toes and be ready to identify areas in

need of improvement or change. As these areas are outlined, care must be taken to prioritize

objectives. In order to maximize the return on available resources, there should

be a structure in place for employing these steps. It is an unending cycle. It is an adaptation

process in a continually evolving environment.

Continuous

Improvement

A premise of instituting

quality through

a cycle of planning,

monitoring, interpreting,

and revising.

Introduction to Service Strategy 223

Continuous improvement is analogized in the common idea that quality service is

a journey, not a destination .

CHANGE THEORY

“It is not the strongest of the species that survives, nor the most intelligent,

but the ones most responsive to change.”

—Charles Darwin

Change theory is the idea that there is a science behind change. Several theories

exist and organizational behavioral professionals dedicate careers to specializing in

helping businesses succeed through transitional periods.

Th ere are many things that make instituting changes diffi cult. Preconceptions,

habits, insecurities, past practices, fear of failure, and jumping to conclusions all aff ect

instituting change.

Th ere is an analogy of change management as being periods: frozen, thawing,

whitewater, and refreezing, as shown in Figure 11.2 . Th e initial frozen state is the status

quo, the usual, the expected, or the norm. It is the way that we have always done things.

Changes will come in many forms. Th ey may be a new technology system, a new

service procedure, new management, or a myriad of other things. When this occurs, a

Change Theory

A science behind

helping businesses

transition through

changes.

Plan

Execute

Plan

Monitor

Plan

Analyze

Plan

Revise and

Adjust

FIGURE 11.1 Continuous Improvement Cycle.

Frozen

Thawing

Whitewater

Refreezing

FIGURE 11.2 Analogy of Change Management.

224 Chapter 11 Strategic Planning for Service

period of unfreezing occurs. To extend the analogy, this may even seem like whitewater.

It will be very problematic. Stress and disorganization will likely occur. Everything

is unsettled.

Th en, eventually, the whitewaters will calm, and it will refreeze. Th ings will also

settle in the workplace. It will not freeze in the same way as before. In fact, it will

probably be much diff erent, but things will settle down. Th en it will again become a

new defi nition of the term frozen .

Th ese changes with unsettling middle points and diff erent end results will continue

to cycle throughout business and life. Th e cycle times may be a few weeks to

several months, and even a few years. People specialize in smoothing these transitions,

but just realizing the cycle and the current stage helps you to see it and manage it more

eff ectively.

Analyzing Position and Market

Does your business currently have a strategy? If so, what is it? If not stated, where is

the company currently headed? What would a silent observer guess is the strategy?

In other words, what does the ‘writing on the wall’ tell you? Follow your intuition.

Th at is probably the current strategy, by design or by accident. It is likely focused on

objectives such as:

■ Sales

■ Fixing or avoiding an error

■ Reducing a cost

■ Forming an alliance

■ Adjusting staffi ng levels

■ Retraining or retooling

Th is will help you to develop a problem statement . Th is is the underlying reason

why something is occurring. Often this is made clear through the SWOT analysis, as

described below.

It may have come from the top administration or from the line staff . It may

be based on feedback from return customers, perceptions of new customers, a

desire to outpace the competition, or developing new sales opportunities. A lack

of communication could be a result of a silo , a metaphor for departments and groups

within the company that do not communicate well with each other. Instead, they all

work in their specifi c areas instead of working together. Th ere could be multiple or

overlapping reasons. In any event, it is important to know where your business stands.

SWOT ANALYSIS

A SWOT analysis is a valuable tool commonly used to establish a starting point in

strategic development. It evaluates both internal and external attributes of a business

Problem

Statement

The root problem or

fundamental cause

of why something

is happening. Often

the results of both

internal and external

analysis.

Silo

A metaphor used to

describe the separate

departments of an

organization that

work independently

and fail to communicate

with each other,

thus replicating processes,

working ineffi

ciently, and causing

frustration.

Analyzing Position and Market 225

SWOT Analysis

An analysis of the

strengths, weaknesses,

opportunities,

and threats of

an organization, containing

internal and

external examination.

and is very useful for observing the big picture also known as the macro view. It allows

you to know where your company stands, where the competition stands, and how the

outside variables infl uence your business. Th e letters of the SWOT stand for:

S trengths

W eaknesses

O pportunities

T hreats

Th e SWOT analysis has two primary components: internal and external. Th e

strengths and weaknesses make up the internal analysis and the opportunities and

threats make up the external analysis. Th e internal components represent the areas of

the operation that are within the direct control of the business, such as operations,

marketing, staffi ng, management, and fi nances. Th e external components represent the

areas of the business over which the business has little or no control, such as competition,

economic conditions, and changing technologies.

Th e attributes are roughly sorted as:

■ Internal or within their control 1 good 5 Strength

■ Internal or within their control 1 bad 5 Weakness

■ External or outside their control 1 good 5 Opportunity

■ External or outside their control 1 bad 5 Th reat

Th e business has no direct control over the external infl uences; it can only adjust

to them.

A SWOT analysis reviews each of these areas. A statement within your control

is internal and is either good or bad. If it is good it is a strength, and if it is bad it is a

weakness. If it is not within your control it is external, and its eff ect on you is either

good or bad. If its eff ect is good, it is a known as an opportunity, and if its eff ect is bad

it is known as a threat.

Other tools such as the Internal Factor Evaluation Matrix (IFE) and the

External Factor Evaluation Matrix (EFE) rate and assign points to the categories for

comparison.

Th e following tables show questions to ask as a starting point of SWOT analysis.

Internal Strength Weakness

Operations What standards do you have in place?

How do your costs of operations compare to industry standards?

Finance How favorable are your fi nancial ratios?

(continued )

226 Chapter 11 Strategic Planning for Service

Internal Strength Weakness

Marketing Can you make your service tangible to the customer?

Do you have a strong brand image?

Are you diff erent from the competition?

Do you want to be diff erent?

Staffi ng Do your employees know your strategy?

Management How does your business support this strategy?

Research and

development

Are you innovative with new products and services?

Management information

systems

How strong is your ability to gather, control and manage

information?

External Opportunities Th reats

Culture How has the mindset of the population changed?

Market—customers What are the growing demographics in your marketplace?

What does the market look like?

How do the customers perceive you?

How do they perceive the competition?

What are their needs?

Why do the customers come to your business instead of the

competitor’s?

Do your customers know your strategy?

Technology How is the technology changing?

Have you leveraged the available technologies?

Competition What is the competition doing well?

Are you a leader or are you catching up to the industry leader?

Are there barriers to entry? What prevents new entrants into

the market?

Benchmark—Look at best-practice methods. Observing the

best-in-class at methods or products, or services.

Retaliation—How will they respond to your changes?

(continued )

Analyzing Position and Market 227

IDENTIFYING YOUR COMPETITION

Determining your competition is highly subjective and often misunderstood. In one

sense, your business is unique in what it off ers to its customers in at least one way. It

is unique either by location, by marketing, by service, by product, or by delivery. In

another sense, it shares many of the same qualities as other businesses and competes

with those businesses on one or more levels.

DIRECT COMPETITION

An interesting planning exercise is to ask a small business owner to name his competition.

He will typically come up with a handful of competitors in the same geographic

area delivering similar products and services to the same customers. He is naming

what we refer to as direct competition .

INDIRECT COMPETITION

If you were to ask the same small business owner about businesses that provide a

slightly diff erent product, the owner might claim, “Th ey don’t touch me. Th ey aren’t

my competition at all.” In one sense he is correct, but in every other sense he is terribly

wrong. Other businesses may be delivering a diff erent product or service, but they are

still competition. A business off ering a slightly diff erent product to the same market is

an example of indirect competition .

Here is another thought. Have you ever been on your way out to dinner at a nice

restaurant and decided to eat at a quick-service restaurant instead? How about the

opposite? What changed your mind? What were the other options?

Indirect competition is still competition. In poor economic times, fi ne dining has

lost customers to upscale-casual dining. Upscale-casual dining has lost customers to

casual dining, who lost customers to limited-service dining, who lost to quick-service

dining. Some customers jump even two or three levels on a whim.

GENERAL COMPETITION

Also, consider a getaway destination package for $299.00. You would love to go.

You may even have the time, but you don’t have the money. Where was it spent?

Who else was competing for your time or your dollar? In general competition (see

Figure 11.3 ), businesses compete for the same time and/or dollar of the clientele, but

with very diff erent products and services. It may not be directly related, but it still

hurts the bottom line.

Direct Competition

Other businesses

who compete for the

same clientele, in the

same industry, delivering

similar goods

and services.

Indirect

Competition

Other businesses

who compete for the

same clientele, delivering

related, but not

identical, products

and services.

General

Competition

Businesses that compete

for the same

clientele’s time and/

or dollar.

External Opportunities Th reats

Economy Unemployment rate, gross domestic product (GDP),

infl ation rate?

Legal/political Are there any new laws that will aff ect your business processes?

228 Chapter 11 Strategic Planning for Service

Integration:

Implementing a Service Strategy

“Th e need to have everyone on the bus is only part of it. It needs to be the

right bus, headed in the right direction, and the right people need to be in

the correct seats.”

—Adapted from Jim Collins, “Good to Great,” Fast Company

Th ere is much to this quote:

■ Having everyone “on the bus” means that you need to have the company

together in a united eff ort.

■ Th e “right bus” means that you need to have the right, or most suitable,

objectives.

■ Th e “right direction” means that the bus (strategy) needs to be properly

implemented.

■ And everyone in their “correct seats” means that you need the right people

in the right places. Th is may mean moving, retraining, or even replacing

people.

Good intentions are not enough. Plans are great, but implementation and

follow-up are crucial for even the best-laid plans. Th e employees are the resource that

is key to making service happen. Employees and management must share the same

values.

Implementation is the process. It is the art of transforming plans and potential

into practice. It needs to go from paper into practice, from a service strategy to actual

service. All of this is part of the strategic service system.

General Market Competition

Indirect Competition

Direct Competition

Industry Sector

Money

Time

Nonsector

Function

or

Purpose

FIGURE 11.3 General Competition.

Integration: Implementing a Service Strategy 229

THE STRATEGIC SERVICE SYSTEM:

PURPOSE, PRODUCT, PLAN, PEOPLE

Th e strategic service system involves four main components: purpose, product, plan

and people (see Figure 11.4 ). All are prerequisites; all must exist simultaneously, and all

are equally important in the strategic process. Each will be discussed in depth.

Strategic Service

System

A four-part system

that involves purpose,

product, plan,

and people.

People

Plan

Product Purpose

FIGURE 11.4 The Strategic Service System.

PURPOSE

“Our mission statement about treating people with respect and dignity

is not just words but a creed we live by every day. You can’t expect your

employees to exceed the expectations of your customers if you don’t exceed

the employees’ expectations of management.”

—Howard Schultz, CEO, Starbucks Coff ee

What do you stand for? What do you want to change? What do you want to focus

on? Customer-centric is an idea that the business should focus every decision with

the customer as the main priority, outranking all others. While this view may seem

drastic, the customer should certainly be a consideration in decisions.

In defi ning the purpose, objectives will likely follow. Objectives come from having

a well-developed purpose. Th ese tools are known as mission and vision statements.

Other objectives come from similar statements, such as a credo .

A mission statement is written for the customers and employees. It is helpful

when evaluating the direction of the company. Topics typically mentioned in mission

statements are:

■ Products or services

■ Markets

■ Technology

■ Profi t/growth

■ Philosophy

■ Employees

■ Customers

Customer-centric

The premise of placing

the customer

fi rst in all a company

does. Focusing on

pleasing the customer

and organizing

the company with that

as a primary goal.

Credo

Originally used for

professing religious

beliefs, was adopted

by companies as a

passionate label to

describe what the

organization stood for.

Mission

A statement that

explains the purpose

of your business.

It is usually a paragraph

and states

the core purpose of

the organization. It

should be the origin

and foundation of all

other decisions for

the business.

230 Chapter 11 Strategic Planning for Service

A mission statement for the overall business typically answers the question: Why

are we in business? Service mission and service vision are similar to a traditional mission

and vision statement, but are targeted toward service. Th e service mission is also

known as the service concept .

Service Mission

and Service Vision

Statement

Similar to a traditional

vision and mission

statement but targeted

toward service.

Vision

A statement, usually

a sentence or two,

that explains where a

business is striving to

go or be in the future.

Typically inspirational

and sometimes a

bit lofty, it is used in

strategic planning.

MGM Mirage Mission Statement

Our mission is to deliver our winning combination of quality entertainment, luxurious facilities,

and exceptional customer service to every corner of the world in order to enhance

shareholder value and to sustain employee, customer, and community relationships

(MGM Resorts International).

Service Insight

Tyson Foods’ Vision

Tyson Foods’ vision is “to be the world’s fi rst choice for protein solutions while maximizing

shareholder value, living our Core Values, and fostering a fun place to work.” The company’s

mission is to produce and market trusted, quality food products that fi t today’s

changing lifestyles and to attract, reward, and retain the best people in the food industry

(Tyson Foods, Inc.).

Service Insight

Ritz-Carlton Credo

Ritz-Carlton’s Credo: “The Ritz-Carlton Hotel is a place where the genuine care and

comfort of our guests is our highest mission. We pledge to provide the fi nest personal

service and facilities for our guests who will always enjoy a warm, relaxed, yet refi ned

ambience. The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfi

lls even the unexpressed wishes and needs of our guests (The Ritz-Carlton).”

Service Insight

A service strategy is a formula for delivering a service. It is a plan that defi nes

the practical interpretation of service. A strategy is a means of obtaining an objective

to fulfi ll goals. General business strategies are classifi ed by function. Service strategies

are more focused on achieving a specifi c service objective or goal so they are geared

primarily toward better serving the customer. Service strategies and general business

strategies should complement each other. Both are important in hospitality.

Example: We are committed to delivering superior customer service that meets

the needs of the customers in a consistent manner of professionalism. Our commitment

to our guests is SERVICE :

Service Strategy

Formula for delivering

a service that

defi nes the practical

interpretation.

Integration: Implementing a Service Strategy 231

S atisfaction

E thical

R espectful

V ersatile

I nnovative

C ommunication

E mpathy

PRODUCT

In many instances within the hospitality fi eld, the product is a service. By changing

the staff and the systems, you are, in a sense, changing the product. In other situations,

better seats, larger screens, or better amenities may be needed.

A service guarantee is a promise of satisfaction for your products and services.

Th is is something the customers will see. Th e staff will be required to memorize it, and

it will probably be posted somewhere obvious. Examples of this are:

“We will meet the expressed and unexpressed wishes of customers.”

“Total customer satisfaction, guaranteed.”

“If you’re not happy, we’ll fi x it.”

PLAN

“How do you eat an elephant? One bite at a time.”

—Bill Hogan, Lluimna Press, 2004

How does it meet the objective? Th e same principle applies; you break it down

and begin. It has been said that every great journey begins with a single step.

A plan is fi lled with careful thought and good intentions, but is never a sure thing.

Instead of thinking of a plan as a “must,” think of it as trying to shoot arrows at a target

on a windy day. Conditions keep changing, and you need to adjust as you go.

Service process implementation is the overall mechanics of implementing actual

standards in the guest service process. It might be a customer relations plan, how will

guests be served, or the actual changes the employees will make.

When developing a plan, you must fi rst break it down into pieces. It must be

based on the desired objectives and fi t with the overall service strategy. It must have a

timeline, communications, guidelines, and many other characteristics.

Timeline

All plans must have a timeline. Each procedure should be calculated and an

order of completion clearly stated. It should be realistic, and provide for a margin

of error.

Communication

How will everyone know? Everyone must be able to recognize and comprehend

the goal. Progress toward objectives cannot be monitored, measured, and

Service Guarantee

A promise of satisfaction

for your products

and services.

Service Process

Implementation

The overall mechanics

of implementing

actual standards in

the guest service

process.

232 Chapter 11 Strategic Planning for Service

achieved if there is a lack of comprehension. Have a slogan. Make it identifi -

able. Hold a contest or a campaign. Report the status.

Guidelines

Revise the employee policies. Outline, ensure the details are described and

that all are aware.

Leadership

Develop a task force. Have a champion.

Measurable

You must have some way of measuring outcomes. It can be speed of service,

comment card averages, or a reduction in the number of complaints.

Relatable

Th e objectives should relate to and support the service mission.

Obtainable

It must be possible to achieve the goal. Target points set too high can cause the

staff and management to become disheartened and frustrated. Th is leads to a

reduction in motivation.

Challenging

Too easy of a goal is ineffi cient, wasting staff and management’s full potential.

Th e total cost of the objective should be within reach.

We Have Changed Our Services

Occasionally, businesses will have to change the way that they offer services. Changing

employees is diffi cult enough, and you pay them! Changing the way that customers transact

is even more diffi cult. Most customers can be placed into three different groups:

1. Customers who mind little or not at all.

2. Customers who need assistance with the change.

3. Customers who want it the old way.

Every change is different. Some are smooth and some create a big headache for

all. Some businesses incur so much grief that they revert back to the old way. It is trial

and error.

What seems obvious to you may not be obvious to others. No matter the change,

whether it is self-check-in, a new rule, or a different pattern, customer service representatives

should always be readily available for assistance. Don’t assume that signage and

mailings regarding the change will be noticed or understood.

Service Insight

Integration: Implementing a Service Strategy 233

PEOPLE

Training

Staff must have the proper skill sets. Training or retraining is often needed with

changes. Many successful organizations promote on-going employee enrichment.

Attitude

A service culture must be evident. Evoke passion, emotion, and a sense of

belonging.

Cultivate in staff a feeling of importance. Let them know how their job supports

the overall quest to fulfi ll the objective. Let them know where the business

would be without them. Only admit those who instill a sense of pride in

their work and take a sense of ownership. Do they call it “theirs”? Do they refer

to it as “their hotel”? Th ey should.

Build their confi dence. Train, monitor, and reinforce it.

When a staff member is given personal responsibility for achieving a specifi c

goal, they are referred to as a champion , or service champion. Th ey would be

responsible for organizing all of the eff orts to achieve the goal.

Motivation

What are the motivators to change? Incentive? Performance? Bonus? It’s your job?

Encourage and support employees in doing their jobs. Th ey must be empowered.

Make sure they buy in to the service strategy. Th ey must see a need.

Customers

Don’t forget about your customers in this process. How much are they

involved in the service process? Some customers prefer to control their service

experience. When they are substantially involved, as in the case of self-service,

this is referred to as coproduction . For this to occur, customers themselves

need to be comfortable with this process. Th ey must be trained and aware.

RESOURCE VIEWPOINT

A resource is something that can be tapped into and worked with to create something else

even more valuable. Consider crude oil in the ground. It is worth marginal value per barrel,

but if you refi ne it you can do so many more things with it. It can become diesel fuel,

gasoline, jet fuel, or even a multitude of plastics and other petroleum-based products.

Resources in business and hospitality are the same way. Th e resource viewpoint

states that every hospitality business has three main resources (see Figure 11.5 ):

■ Human resources

■ Financial resources

■ Physical resources

Champion

A person commissioned

with the task

of achieving a desired

goal. This individual

would be responsible

for organizing all

staff, systems, and

procedures to align

the organization in its

efforts to achieve the

assigned goal.

Coproduction

The extent to which

the customer should

be involved in the

process of service,

which gives the customers

a sense of

control and tailors

their service, contributing

to the success

of the encounter.

Customers must

be trained, and the

instructions obvious

and clear and support

given.

Resource

Viewpoint

The idea that every

business has three

resources with which

to work and to use to

their benefi t.

234 Chapter 11 Strategic Planning for Service

Human resources is the most important resource of all. It

is also the most variable, the least controllable, and the least

effi cient.

Financial resources are the dollars that move through the

business. Th ey are the most closely regulated resource. Bank

deposits are made daily. Financial accountants and revenue

managers precisely calculate, predict, and control every facet of

the stream of revenue through a business.

Physical resources consist of all of the tables, seats, beds,

planes, rooms, buildings, screens, monitors, and technology in

a business. Th ey are controlled and monitored to produce optimal

effi ciency while balancing costs and demand.

Every decision involves the allocation of resources in

some sense. In a way, the manager is constantly managing

and balancing resources. Increasing guest service is not free.

It involves retraining and monitoring. Sometimes, an increase

in staff is necessary. It usually involves a demand in physical

resources for nicer seats or infrastructure, which in turn places

a greater demand on fi nancial resources. Ideally, the manager should be working with

each of the three main resources to build them up just as you would refi ne crude oil to

make other more valuable products.

CHAPTER REVIEW QUESTIONS

1. List the three components of strategy.

2. Explain why strategy is both important and natural.

3. Outline the basic concept of continuous improvement.

4. What is the strategic service system?

5. What are the three resources common to most all businesses?

6. What does the “O” in SWOT stand for?

7. What is the benefi t of conducting a SWOT analysis?

8. What is the difference between internal and external components of the SWOT analysis?

9. What are fi ve of the characteristics you should consider when developing a plan?

10. What is the best advice that you could provide for a property about to change or alter its

services?

CASE STUDIES

Emily’s Farmhouse Chicken

Emily’s is a small restaurant located in the Midwest. It features fried chicken in an old farmhouse.

Locals and those from the surrounding area patronize Emily’s for homemade chicken

and dumplings. White gravy is a specialty. It offers a very limited menu that has worked well in

the past. People who are fortunate enough to fi nd a seat in the small dining room/living room

Human

Resources

Financial

Resources

Physical

Resources

FIGURE 11.5 The Resource Viewpoint.

Case Studies 235

are served family-style, all-you-can-eat chicken for one low price. Places like Emily’s populated

the Midwest and South for many decades. They were successful until cities developed

and chain restaurants offered many more choices at competitive prices. While Emily’s still

holds a loyal clientele, the experience of eating homemade cooking in a small, old farmhouse

is slowly beginning to lose the interest of some patrons. Carol, Emily’s daughter and

long-time employee of Emily’s, noticed this change. She mentioned it to Emily who told her,

“Don’t fi x it if it ain’t broken.” Carol tried to explain that it was beginning to be broken and

that if they didn’t look toward the future now, it would soon be too late.

1. Evaluate Carol’s mindset.

2. Was Carol thinking strategically? Explain.

3. At this rate, predict the future of Emily’s in 10 years.

Rusty’s Emporium

Russell (Rusty) Donovan loved having fun. He scraped together enough money to buy an old

factory and begin Rusty’s Emporium 15 years ago when he was in his 20s. Rusty’s motto

has always been, “Have fun.” Rusty’s Emporium is an entertainment center. Over the years,

Rusty had fi lled his Emporium with a multitude of attractions. He went to auctions and

acquired many items. Some are used, and some are displayed, while others are sitting out

back with large blue tarps over them.

Rusty began with laser tag and an arcade, but has grown to include a skateboard park,

paintball, rock climbing, a pool with a slide, four hot tubs, miniature golf, a foam pit, a carousel,

and a snack bar. Most recently, he began hosting kids’ birthday parties.

Things have become busy with the parties and all of the other attractions, but the growth has

also brought problems. Very different crowds of people attend the different attractions and they

don’t always blend. He is having diffi culty maintaining the different attractions, and they often spill

over from one to another. He can no longer oversee the Emporium himself, so he has had to hire

more staff and incur more expenses. It is diffi cult to predict what attraction will be busy, so staffing

and training has become diffi cult. His revenue has increased, but is becoming overshadowed

by his costs. This was originally a fun place that Rusty enjoyed; now it is a disorganized mess.

1. Evaluate Rusty’s strategic plan.

2. What has Rusty done correctly?

3. What advice could you provide for Rusty at this point?

Sheila’s Spa

You could say that Sheila’s whole life was about spas. Her mother owned one when she was

younger. Sheila had worked in spas since high school. She went to a local college and took

classes on spa management. She delighted in traveling to destination spas for vacations,

and now she fi nally has her chance at owning and operating her very own spa.

She has spent countless hours exploring the options. She wanted just the right combination

of everything! She had kept a journal detailing her experiences at various spas around the

world. She had saved all of her plans from her class projects during college. She went to the

bookstore and bought every book available on spas. She even found a few computer programs

that allowed her to play spa simulations. It was a labor of love. Everything would be perfect!

CASE STUDIES continued

236 Chapter 11 Strategic Planning for Service

Sheila decided to begin the hiring process, so she set up a series of interviews. She

interviewed all candidates at least twice. She used a behavioral interview for the fi nalists,

then went to their past employers and clients to verify their skills fi rsthand. Some candidates

had as many as six interviews.

She went to trade shows and warehouses and shopped on-line, observing literally every

product on the market relating to spas.

She used a computer program to lay out the spa and projected her earnings for her

business plan. Her banker asked her when she planned to open. Although her fi nancial

situation was still in great standing, Sheila told him that she did not yet want to open until

everything was perfect. She believed that if you open and it isn’t perfect, then customers

will not return. During the next few weeks, a few of her new hires took positions at

competing spas. Things were very close to opening, but Sheila feared they weren’t quite

perfect.

1. Assess Sheila’s planning technique.

2. What issues do you foresee in Sheila’s planning?

3. What advice would you provide for Sheila?

Hal’s Diner

Hal is a veteran of the food-service industry. He is self-taught, beginning his career washing

dishes at age 9 in his father’s diner. Everyone knew this because he told them about

it nearly every day. Hal recently opened Hal’s Diner with his own savings. He served typical

diner Greek food that he had always known and served. He knew it all very well. A few other

diners also scraped out a meager existence within the downtown area, but Hal believed that

his would be the best.

Jason was hired as a waiter. He waited tables, but was much more than a waiter. Jason

was in college studying to be a food-service manager and was a very bright and talented

young man. He was working his way through school and took on night shifts to learn more of

the industry and pay the bills. Late one evening when things were slow, Hal struck up a conversation

with Jason. He asked him if they ever taught anything like this at his school. Jason

wasn’t sure what to say because Hal was very outspoken. Hal pressed further, “I see you

watching everything. How do you think I am doing?”

Jason decided to speak his mind. “Hal, you are a veteran of the industry and I respect

that, but times are changing and you must plan for it. Customer service and monitoring

the competition are important. You cannot simply think that you are unique with what you

are doing.”

Hal’s face turned bright red and his fi sts clinched. “I have been doing this for 53 years.

You kids think that you know so much. The competition has nothing on me and the customers

who don’t like it can go down the road.”

1. Who was correct, Jason or Hal?

2. Assess Hal’s Diner compared to the competition.

3. What can be done to help Hal?

CASE STUDIES continued

Exercises 237

EXERCISES

Exercise 1: SWOT Analysis

Directions: Choose a local hospitality company and fi ll in the SWOT Information Chart

below:

Company Name:

Internal

Components

Strength or

Weakness? Substantiation

Operations

Marketing

Employees

Management

Research and

development

Market—customers

Technology

Competition

Economy

Legal/political

Exercise 2: Vision/Mission Review

Directions: For the purpose of this exercise, use the vision, mission, credo, motto and any

other narrative that the company publishes. Choose a hospitality company that interests

you. Review their vision and mission statements and other narratives and attach them

to the back of this assignment. Complete the questions below.

Company Name:

1. What is the one line that describes what the company stands for?

2. What is the main priority of the company?

3. How many times is customer/guest service mentioned?

4. What would you change, remove, or add to the statements?

238 Chapter 11 Strategic Planning for Service

Exercise 3: The Strategic Service System

Directions: Relate the Strategic Service System to a business in the local area. Outline your

responses below:

Business Name:

Type of Business:

1. Purpose:

2. Product:

3. Plan:

4. People:

EXERCISES continued