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Bearing in mind all said about hospitality businesses, we can approach now the difficult problems of their management, whose key functions are (a) forecasting and planning, (b) decision-making and setting the goals, (c) control of the efforts of the subordinates to accomplish the goals set.

The first of the management functions is strategic planning (the managerial process of developing and maintaining a viable fit between the organization's objectives and resources and its changing market opportunities). The strategic plan includes (a) the external analysis which considers the company's marketing opportunities (an area of need in which a company can perform profitably) and marketing threats (unfavorable trends that would lead, in the absence of defensive action, to deterioration of sales or profits), and (b) the internal, or strengths/ weaknesses analysis which considers the company's financial, manufacturing, and organizational competencies. The gap between desired and projected sales is called strategic planning gap. It can be filled by the strategies of intensive growth (development of the company's current businesses), integrative growth (acquisition of the new business related to the company's current interests), and diversification growth (acquisition of the new business that are unrelated to the company's interests).

Management is a purposeful process of goal settings and goal achievements. Much depends on who sets the goals and how they are achieved. Goal setting is a key element in the so-called management by objectives, where goals are supposed to be set by employees, not managers. Once he employee has set the individual and group goals, management approves them. The employees are far more likely to achieve goals they have set themselves rather having them set by others. This supposition is an important part of the so-called total quality management (a process of total organizational involvement in improving all aspects of quality of product or service).

In order to fulfill the functions of planning, decision-making and control, the managers must have special skills: conceptual, human, and technical. Conceptual skills enable managers to view the corporation as a unit and yet understand how it is split into departments to achieve specific goals. Human skills enable managers to build teams and work with people on interpersonal level. Technical skills enable them to understand and use techniques, methods, equipment, and procedures. As a manager rises up, the need for technical skills decreases and the need for conceptual skills increases. Human skills are always necessary.





One of the methods to manage various businesses within the company is creating the so-called strategic business units (the SBUs) one or several businesses that can be planned and managed separately from the rest of the company. In order to manage them properly, it is necessary to classify them by their profit potential and deal with them accordingly. Usually it is done with the help of the techniques known as the growth / share matrix, developed by the Boston Consulting Group (BCG). The vertical axis of this matrix indicates the annual growth rate of the market in which the business operates: whether it is low or high. The horizontal axis shows a relative market share that may also be high or low. The current size of the businesses making up a company is shown by a bigger or smaller circle representing it. The location of each circle indicates the market growth rate and relative market share. In such a way, the growth/share matrix is divided into four cells, each indicating a different type of business.

Question marks operate in high-growth market but have low relative market

share. So the company has to think hard whether to keep investing into these businesses. Most businesses start off as a question mark. If the question-mark business is successful, it becomes a star the market leader in the high-growth market. This does not necessarily mean that the star produces a positive cash flow for the company, but in future they promise profit. When a market's annual growth rate falls greatly, the star becomes a cash cow if it still has the largest relative market share. A cash cow produces a lot of cash for the company. The company uses it to pay its bills and support the stars and question marks. The least profitable businesses are called dogs. They have weak market shares in low-growth markets, and consume more management time that they are worth.

Having located its various businesses in the growth / share matrix, the managers then think whether the business portfolio is healthy or unbalanced, which determines a strategy to choose toward each SBU. Four alternative policies can be pursued: building, holding, harvesting, and divesting.



1. Find in the text the following topical words and phrases, make sure that you are able to explain in English what they mean, and add them to your working vocabulary:

the SBUs, the growth / share matrix, the annual growth rate, question marks, stars, cash cows, dogs, harvesting, divesting.


2. Write out from the text the parts of the sentences which contain the following words and expressions and translate them into Russian:

appropriate, the market growth rate, to start off, cash flow.


3. Answer the following questions using the topical words and phrases:

1. What does the growth/share matrix help to understand?

2. What does the vertical axis of the matrix indicate?

3. What does the horizontal axis indicate?

4. How is the current size of the businesses shown on the model?

5. What does the location of circles indicate?

6. Draw the growth / share matrix of an imaginary company and explain its structure with the help of this model.

7. What companies are called "question marks"? Why is it difficult for a company to keep many businesses of this type?

8. What businesses are called "stars"? Is it profitable for a company to keep many businesses of this type?

9. What conditions are necessary for a "star" to become a "cash cow"?

10. What businesses are called "dogs"? What is the best thing the company can do with them?

11. What is meant by healthy portfolio?




As it implements its strategy, the firm needs to track results and monitor new developments in the environment. Peter Drucker pointed out that it is more important to do the right thing (being effective) than to do things right (being efficient). And doing the right things right means making the right decisions at the right levels.

Top managers tend to focus most of their time on strategic planning, the organization mission, and controlling the activities of the corporation. They do not get involved in day-to-day aspects of the operation. They fall to supervisory management. In hospitality lingo, one would not expect Bill Marriott to pull a shift behind the bar at the local Marriott hotel. Thus, although the head bartender and Bill Marriott may be both considered managers, the levels of their decision-making are different. The success of all organizations depends on the quality of decision making. There are two types of decisions: programmed and nonprogrammer. Programmed decisions recur on a regular basis for example, when the number of steaks goes below a specified number, an order for more is automatically placed. Programmed decisions generally become a standard operating procedure (SOP). A nonprogrammer decision is nonrecurring and made necessary by unusual circumstances, such as which computer software a restaurant should install, or whether to expand by franchising or company-owned restaurants. Nonprogrammer decisions call for greater analysis, innovation, and problem solving. When decision-making is centralized, the decisions are made at the corporate level and are channeled down the chain of command. Lower-level employees simply follow policies and procedures. Marriott is an example of such company. However, even centralized corporations have adopted initiatives, which have given more leeway to the front-line employees to do whatever it takes to satisfy the guest. The more decisions made at lower levels, the more decentralized an organization is said to be.

The term span of management (or span of control) refers to the number of people that one manager can effectively manage. The number of people that a manager can supervise depends on the type of organization (centralized versus decentralized) and the degree of its sophistication in terms of efficiency and effectiveness. The trend today is for the span of management to increase to twelve or more, instead of six to eight subordinates. It reduces costs and increases efficiency by allowing a greater say in the operation at all levels.




1. Find in the text the following topical words and phrases, make sure that you are able to explain in English what they mean, and add them to your working vocabulary:

to monitor the developments, an organization mission, a bartender, programmed and nonprogrammer decisions, to place an order, SOP, to be channeled, span of control.


2. Write out from the text the sentences or their parts which contain the words and phrases given below and translate them into Russian:

to track results, in hospitality lingo, to pull a shift, a front-line employee, the degree of sophistication, a subordinate, to recur on a regular basis, nonrecurring.


3. Answer the following questions using the topical words and phrases:

1. Why is it necessary for a company to revise its strategies?

2. Which is more important for a manager to be effective or to be efficient? What is the difference between these two synonyms?

3. What decisions are called programmed and what nonprogrammer? What type of decisions would you think more typical to make for managers in big organizations? Why?

4. What are the supervisory managers expected to do?

5. How are decisions channeled in centralized organizations?

6. How are the decisions made and spread in decentralized organizations?

7. What is meant by a span of control? Why has it increased recently in hospitality corporations?




The most important function of a manager is to set tasks to his subordinates and to organize their fulfillment. Industrial psychologists did a lot to show better ways to do it more successfully. Douglas McGregor contrasts two approaches to management, calling them Theory X and Theory Y. Theory X assumes that the average human being has an inherent dislike for work and will avoid it if possible. That is why people must be controlled, directed, or threatened with punishment before they will put forth effort toward the achievement of organizational objectives.

Theory Y assumes that the average man does not inherently dislike work. For him physical and mental effort at work is as natural as play and rest. External control and the threat of punishment are not the only means to direct effort toward organizational objectives. People will work willingly at the objectives to which they feel committed, receiving the most significant rewards the satisfaction of ego and self-actualization from these efforts. In 1981, William Quiche proposed the so-called Theory Z, which focuses on forming and maintaining manager employee relationships through the use of group dynamics when the employees are involved in decision-making by consensus. There are also other theories of leadership. Contingency theory links leadership style to the needs of a particular situation. In some circumstances, such as a crisis moment, it may be useful for the leader to issue direct orders to be obeyed precisely. In such situations, the leader assumes a Theory X persona, but he should revert to the more participative Theory Y leadership style for greater effectiveness.

In order to work according to Theory Z, a special type of leadership is necessary called transformational leadership. A transformational leader inspires others not by performing the day-to-day tasks of subordinates, but by developing and encouraging their commitment to a shared vision of the future. Often it takes some form of communication known as "grapevines" informal communication with staff can help to develop trust and commitment.




1. Find in the text the following topical words and phrases, make sure that you are able to explain in English what they mean, and add them to your working vocabulary:

ego and self-actualization, group dynamics, by consensus, commitment to, contingency theory, participative, to assume a persona, transformational leadership, "grapevines".


2. Answer the following questions using the topical words and phrases:

1. What assumptions does Theory X make about human beings in respect of their attitudes to work? What management strategy does it offer?

2. What does Theory Y assume about working habits of the average man? What management strategy does it offer?

3. What are the most significant rewards for human beings, according to this theory?

4. What does Theory Z focus on?

5. What management strategy does the contingency theory offer?

6. What is meant by transformational leadership? Why this style is most appropriate to implement Theory Z?




1. Discuss the following concepts and notions:

conceptual skills, human skills, technical skills, levels of management, strategic planning, the external analysis, the strengths / weaknesses analysis, a strategic business unit, the growth/share matrix, management by objectives, quality control, total quality management, span of control, contingency theory, transformational leadership, "grapevines".


3. Give your definitions of the following words and phrases:

marketing opportunities, marketing threats, organization competency, to be rated, the annual growth rate, question marks, cash cows, stars, dogs, harvesting, divesting, short-range planning, disposition of resources, an organization mission, programmed decisions, nonprogrammer decisions, front-line employees, to recur on a regular basis, nonrecurring, internal guests, error detection, a top-down process, participative, indispensable, to soar or to plummet (about stock), an employee turnover, a customer survey, to be in short supply.


4. Choose a topic for Project Work or an Essay from those given below:

1. The advantages and disadvantages of the portfolio model. Arrange a talk show on this issue.

2. Problems of decision-making in the hospitality industry.

3. Contrast Theory X and Theory Y from the point of view of scientific management. Arrange a talk show on this issue.

4. Transformational leadership and the possibilities for its application in hospitality industry.

Unit 9.




Date: 2016-01-03; view: 222

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