Description
Management in all business and organizational activities is the act of coordinating the efforts of people to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization
Research Paper on Sky Bar Management
Outline
Theoretical part: ________________________________________________________ 2 Introduction: _________________________________________________________ 2 Literature Review: ______________________________________________________ 4 Definition and Brief History of Strategy: ___________________________________ 4 Strategic Management Practices __________________________________________ 4 Corporate strategy: ____________________________________________________ 5 Competitive strategy: __________________________________________________ 7 SWOT Analysis ______________________________________________________ 8 Practical part: _________________________________________________________ 10 Overview of the Company: _____________________________________________ 10 Size _______________________________________________________________ 11 Values _____________________________________________________________ 11 Mission ____________________________________________________________ 11 Vision _____________________________________________________________ 12 Competitors _________________________________________________________ 12 Managers description: _________________________________________________ 12 Analysis of field work: ________________________________________________ 13 Conclusion: ___________________________________________________________ 15 Appendices:___________________________________________________________ 16 Interview: __________________________________________________________ 16 References: _________________________________________________________ 18
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Theoretical part:
Introduction:
Strategic management is defined as an area that handles main proposed and developing initiatives taken by managers on behalf of owners. These involve various ideas such as the utilization of resources and the improvement of the firm’s performance in their external environments.
Strategic Planning is an inclusive practice used to determine what a business should develop and how it can best achieve its goals. It evaluates the full potential of a business and clearly relates the business's objectives to the actions and resources required to achieve them. Strategic Planning consist of 7 different tools, 3 of which we’re going to discuss.
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SWOT Analysis Competitive Analysis PEST Analysis Scenario Planning Goals Grid Supply Chain Analysis Using focus groups as part of strategic planning The STP (Situation- Target- Path Model)
To begin with, competitive analysis consists of taking those that compete in your market place into consideration, and using information about your competitors to affiliate where your strengths are comparative to those of competitors. One of the philosophies
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that lead to becoming competitive is to leverage your strengths and lessen your weaknesses with respect to competitors.
Furthermore, SWOT analysis is a method widely used in strategic planning, it revolves around the evaluation of the internal and external environments of the firm in order to better view its position in the market. Both the external and internal environments are composed of two parts, the internal consisting of strengths and weaknesses and the external of opportunities and threats. Strengths represent the characteristics of the business, or project team that give it an advantage over other whereas weaknesses are characteristics that place the team at disadvantage relative to others. Threats are external elements in the environment that could cause difficulties for the business or project, while opportunities represent external chances to improve performance in the environment. As a final point, Scenario planning, the “what if” process. It is known to be a very logical and sensible process. It mainly revolves around the future where people anticipate possible events, scenarios or changes, and analyze what could happen to the corporation due to those predictions taking place. Also, planning to minimize any damage, and maximize opportunities. The rationale behind choosing these topics is the fact they’re incredibly significant. They aid management in understanding what needs to be done in order to improve the company’s position in the market place. Not only does it help the company evaluate its performance, but it also assists in understanding their competitors. It is used to comprehend their competitive advantages and disadvantages, the competitors past, present and future strategies and it enables the identification of gaps in the market for products, services or initiatives. In addition to understanding competitors, it tends to provide enhanced predictions for the future, which allows management to make better and faster decisions. Furthermore, it tends to improve capital management more efficiently, which ultimately improves the return on equity.
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Lebanon is one of the most striking countries in the Middle East. It is renowned for all its amazing historical sites and nature. Tourism is one of Lebanon’s strongest sectors where nightlife and hospitality structures a large part of it. We chose Sky bar because it is ranked number one lounge in Lebanon. Our main objective was to expose the reason behind all this success, and whether this corporation implements the concept of strategic management and planning.
Literature Review:
Definition and Brief History of Strategy:
Strategy is an indelible plan of action designed to accomplish a specific goal. The theory, however, was not initially made for business but, the business industry borrowed it from the military to facilitate organizations in closing the gap between policy and tactics. Strategy is a word modified from the word “Strategia” in Greek. It is defined as generalship, which concerns the deployment of troops in the military. Throughout the years, the concept of strategy has been used in various industries, including business and politics, and began to be defined as the job of top management, which is of great significance to the firm. The concept of strategic management in business application advanced into two mainstreams of theoretical approaches, content and process. Content view of strategy almost completely focused on the internal analysis of the company, while the process view of strategy concentrated mainly on the procedure of managing amendment and competition. Strategic Management Practices Strategic management according to Fred R. David, a business strategy author, is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives. It consists of the official 4|Page
method or set of procedures that are used to establish the strategies for the organization. It concentrates on numerous fields; which include the incorporation of management, marketing, finance/ accounting, operations and computer information systems. Strategic management assists the firm in fulfilling one of its major objectives, success, by formulating diverse strategies, implementing them and evaluating the results. 1- Identify organizations goals, missions and strategies. 2- Perform internal analysis, strengths and weaknesses, and external analysis, threats and opportunities. 3- Formulate strategies 4- Implement strategies – marketing, finance, accounting, R&D, MIS issues 5- Implement strategies – management issues 6- Generate, evaluate and select results. 7- Establish Long-Term Objectives 8- Develop Mission and Vision Statements
Basically, strategic management consists of three parts, strategy Formation, Strategy implementation and strategy evaluation
Corporate strategy: Corporate strategy is defined as the direction and the general range of an organization and the method in which it's numerous business functions work with one another to accomplish set objectives. Corporate strategy is divided into three parts, growth, stability and renewal. Growth, where the company focuses on the main line of business and on the practice of augmenting the number of products offered and markets served. Stability, is used when executives aim to preserve the status quo or the "state in which" to handle the doubtfulness of a constantly changing environment. Finally, renewal strategy where managers develop strategies to avoid company weaknesses that tends to lead to
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performance deterioration. Growth strategies are divided into several parts, namely concentration, vertical integration, horizontal integration and diversification. Concentration is when a company makes effort to increase its product offered or markets served. Vertical integration is divided into two parts, either backward vertical integration where the company attempts to take control over its suppliers, or forward vertical integration, where the company attempts to gain power over its output by becoming its own distributor. Horizontal integration, on the other hand, is when a company starts working with another company in the same industry in order to produce better quality products and decrease rivalry. Finally diversification is of two types, related and unrelated. Related diversification is where the organization expands by merging with diverse but related industries. Conversely, unrelated diversification is when a company unties with a different firm and in an unrelated industry. Corporate image is built on a range of factors. One such factor is the vision mission statement of a firm. This assists the firm in setting up its long-term goals. Another factor would be dependent on whether the corporation satisfies its economic responsibilities towards the public. Such responsibilities include customer satisfaction, earning a fair return on funds commended to the company by its investors, create jobs, and endorse innovation and diversity. Moreover, the firm should operate under or follow rules and regulations that are set by the government. Also it should be very ethically responsible, where they use practices that are tolerable by the society and the business world. Numerous studies have verified that an undesired corporate image would be one with negative corporate social responsibility. Industry surveys conducted imply that a large percentage of consumers will switch to products that reflect more concern about the community, for example. In other words, negative corporate image can have damaging effects on overall product valuation, whereas positive associations can enhance product assessment.
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Competitive strategy: A competitive strategy refers to how an organization competes in a certain business. A company that is involved in only one line of business, the way it competes in its main market will be described in its competitive strategy. On the other hand, if the company has more than one line of business, each line will have its own competitive strategy that will be used to describe its competitive gain, the commodities it will put forward and the customers intended. Competitive advantage is acquired by either implementing a cost leadership strategy differentiation strategy or a focus strategy. A differentiation strategy is where the organization differentiates its offerings from rivalry's offerings by, for example, being more innovative. Cost leadership strategy is where the organization presents lower prices than its competitors. And finally, focus strategy is where the firm applies the previous strategies on certain segment rather than the whole market. Other methods of gaining competitive advantage can be achieved by several approaches. Some of which are, forward integration, backward integration, horizontal integration, market penetration or seeking a larger market share, market development or introducing same offerings to new geographic areas, product development or the process of improving existing offerings, concentric diversification, horizontal diversification, retrenchment, divestiture and liquidation. Porters five forces model was introduced year 1979 by Michael E. Porter, graduate of Harvard business school. It is a structure for industry study and business strategy. It states that there are five competitive forces, threat of new entrants, threat of substitutes, bargaining power of buyers, haggling power of suppliers and of course current competition.
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SWOT Analysis
SWOT analysis, as mentioned above, revolves around the evaluation undertaken by the management of the firm, of the internal and external environments of the firm in order to better view its position in the market. It consists of an external and internal assessment. The rationale behind external analysis is to establish opportunities that could be advantageous to the firm. This comprises of the assessment of legal, political, environmental, economical, social and technological (PESTEL) benefits and drawbacks of the organization and adjusting the needed. Conversely, an internal appraisal consists of the evaluation of internal performance of the company, for instance, the constancy of its management system. The external business environment's dilemma with competitive advantage led to the initiation of Porters five forces model. His theory of competitive gain tends to centre geographical industrialization and innovation in the process of development and competition. Porter mentioned four properties in this theory. He started with factor conditions, which fundamentally refers to a country's place on factors of production. These are essential in order to compete in a set industry. He also discussed demand conditions, which is defined as the normal demand (national or local) for tangible and intangible products. Another characteristic would be related and supporting industries. It relates to the existence or nonexistence of supplier industries and additional associated industries that compete on an international level. Finally the last attribute would be firm strategy structure, which has a propensity to determine the situation in the country governing how organizations are established, organized, and run. Porter's model has been criticized mainly because it did not include the effects of culture and politics on competitive advantage. It also fell short when it came to presenting an inclusive explanation on the formation of clusters. Not only did it fail explain cluster formation, but it also did not mention the competitive gain that comes from alliance or strategic alliance.
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Internal analysis consists of the evaluation the company's strengths and weaknesses. People, Resources, innovation, marketing operations and finance (PRIMO-F) are the tangibles that are to be assessed. Intangibles are tougher to analysis due to the fact that they are not measurable. Employee skills, culture and corporate reputation are examples. During the internal analysis of the firm, managers are concerned with two explicit illustrations, the issue of culture and staff management. One way of assessing culture is the observation of its value dimensions. As elaborated by Geert Hofstede, there are several cultural value dimensions. Some of which are, large power distance versus small power distance, individualism versus collectivism and Masculinity versus femininity. Firstly, Large versus small power distance. Large power distance is defined as the degree to which members of a community accept that power in establishments is allocated unequally. On the other hand, small power distance is the extent to which it’s distributed fairly. Secondly, individualism versus collectivism. Individualism is the habit of being independent or self-reliant. However, collectivism is the principle of giving group precedence over the individuals in it. Thirdly, Masculinity versus femininity. Heroism, assertiveness and material success are related to masculinity. On the other hand, relationships, modesty, caring for the weak and quality of life are associated with femininity. In order to accomplish a successful SWOT analysis, managers should be especially realistic in terms of strengths and weaknesses. Differentiation between the organizations current standpoint and its possible future position should be made. Specificity is very vital to achieve accurate analysis, where analysis is made in relevance to competition. Complexity should be avoided by keeping SWOT short and straightforward. Finally, opportunities and strengths that are available for competitors as well as the organization should not be listed.
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Practical part:
Overview of the Company:
The concept behind sky management started off a while back, with a lounge called sky bar on the roof of the Palm Springs hotel. The place was a success however sky management, as a firm did not exist back then. Two years after opening the lounge closed and they decided to relocate into a newer better location. Biel was chosen and in the summer of 2006, sky bar Biel opened its doors for the first time. It seemed like misfortune was following sky bar, 3 days after the hit opening 2006 war broke in Beirut. The owners decided to close for the season, immense losses were taken, and sky bar and sky management was threatened before it even emerged.
In the summer of 2007 Sky bar opened its doors once again, and by the end of summer proved a huge success amongst the best Lebanese clubs. Sky management was formed in order to run this venue, and immediately its name was synonymous with exquisite high-end venues. Sky management quickly expands into surrounding regions by opening two new venues in Egypt by 2008, sky beach a luxurious resort, and sky bar Egypt. Currently sky bar runs a list of venues in the Middle East region, restaurants and clubs mainly. They also take care of getting international artists into the area by having them perform either at concerts or at their venues. Sky management only takes of care of the VVIP section at concerts and provides the same high end service as at their locations. They also signed a contact with the number one chef in Lebanon “Giovanni”, along with the top 12 local djs in Lebanon. Their attention to detail is one of a kind, they work on surprising clients, and exceeding expectations is there motto. After becoming leading in nightlife they are shifting into the restaurant industry. Lisa (Lebanese concept launched in Paris already) and la Creperie (legendary restaurant over 50 years old in a prime location facing jounieh port) are 2 venues under development by sky management right now.
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Sky management believes in being the best at what they do. They focus on exclusivity, attention to detail, and providing the best service. Innovation is a major part of their work “New things keep people coming” says Sky Managements marketing manager. “We are currently working on our largest project to date, a winter night club called “The One”. It will be the most innovative club in the region and one of the most innovative in the world. A new technology called 3d mapping projection will be implemented into the club, blending holographic images into the night life experience.
Size
Sky bar is a medium size company and is actually considered small for the size of its projects and the large area it does business in. HR is one of its strongest assets, along with prime locations in each of the countries Sky management functions in. Values Integrity – Passion – Loyalty Thriving to maintain customer trust. Providing infallibly reliable service; maintaining the clients permanent satisfaction Among sky managements central aims is to maintain high standards of conduct and upright values. Mission
Our primary concern is the long-term satisfaction of our clients. We ensure it through loyalty, consistency, creativity, and extreme attention to detail.
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Vision
Owning and successfully running the top venues in the world, and having a name synonymous with exclusivity and quality around the world.
Competitors
In a country where the tourism sector is most prominent, competition on restaurants and clubs is intense. Sky bar has managed to place itself as a leader, the best club in Beirut many call it. White is the most notable competitor for sky bar Beirut, and are constantly improving. Sky management knows that if they do not offer new concepts year in year out, they will become boring and their competition will overtake them. In terms of restaurants Competition is fierce and comes from all directions. Even “Giovanni” the number one chef in Lebanon, who also happens to work with sky management, runs several restaurants that form fierce competition with sky management’s. Manager’s description:
Managers name Abraham halal Manager’s position head marketing manager at sky management
Abraham halal is Lebanese, born in Lebanon. Since a young age he portrayed interest in the hospitality field and always wants to work in it he went to school in Beirut then traveled to Switzerland and attained a BA in hospitality management from Ecole Hotelier to Lausanne. In Switzerland Abraham fed his passion with experiences that amazed him. His passion grew with time "and is still growing" he says. Wherever he goes he keeps a keen eye on new concepts and ideas, or ones he dismissed earlier, and enriches his knowledge further feeding his passion. "Whenever I travel I'm always looking to try new restraints and pubs. I ask local’s o their favorites, and read guides and check all the places 12 | P a g e
that I can." It forms the major part of any trips and is always the most intriguing. Abraham comments that many people have dreams and they let go of them after going to university they choose the easier path. Ever since he first entered university Abraham insisted that he'd never fall for that. “I focused pin my vision and always thought of ways on how to apply what I learned into the hospitality field." he said. He took 2 internships one in Kuala Lampur and the other in Paris, both in hospitality and both in fine restaurants. After these 2 experiences I fell in love with the job and I was sure I would never work in anything but hospitality. He claims he enriched himself with these cultures along with the culture of every country he has visited, and that made him better at his work. Opportunity lead Abraham slightly off his vision and into the field of consulting however even there he in sited on remaining in his comfort zone and specialized in consulting for food and beverage firms. After that he spends 2 years at the Ritz Carlton hotel, and that sired him even further. Abraham was introduced into sky management informally by being close friends by being close friends with several key members of the sky management team, including the previous marketing manager. He always considered sky management’s work as extraordinary on the global level, and one of a kind when it comes to the region. "Sky management embodied my dreams in the form of a leader in the industry I enjoy my work here and I'm always looking forward for work. That is something only a few people can say.” Analysis of field work:
Sky management has adopted a very interesting corporate strategy. There is no doubt that Sky management is undergoing a growth strategy, and its working. Going into the interview I expected Mr. Halal to reply, “Our strategy is growth and so on” rather he did not. He spent his time talking about the projects being developed at the moment, multimillion dollar investments; he wanted us to understand the level of growth planned. He talked about what we classified as horizontal integration, mergers, and diversification. Sky management has bought several of its competition, most recently the famous la creperie in jounieh. Also Sky management has merged with a very notable competitor, 13 | P a g e
Giovanni the number one chef in the region, to form 2 recently opened restaurants. And finally diversification is routine for sky management. No two venues offer even remotely similar experiences, in the past they moved from nightlife, to restaurants, to catering, to resorts. Even within nightlife, or any one of the categories the diversity is immense.
Sky management does one unorthodox form of vertical integration, in this field many firms outsource the venue management, and sky management doesn’t. “Very few firms run their venues, rather management is outsourced. So us doing our own management, as well as doing other firm’s managements for a fee is partly vertical integration.”
When it comes to image, very few stand better than sky management. The name is known for “perfection”. This is due to the fact that sky management formed their mission and vision and stuck to them; they formulated objectives to guide them through, set up plans, implanted and controlled all while keeping the vision in focus. That is the major reason sky management image is as good as it is today. Sky management also adopts a strong culture that has strict values, further enhancing its performance and image. Also sky management is one of the few firms that adopt CSR in the area.
When it comes to competitive strategy the firm follows a differentiation strategy. Sky bar is constantly changing providing a new experience different from all competition and different from itself in the previous season. The firm focuses on quality and innovation as the main two core competencies giving it its competitive advantage. Sky management also offers exquisite and exclusive services that very few can match. Sky management also competes by entering new markets where competition is weaker, such as Egypt and other places in the MENA region. When it comes to innovation, “The One” is a great example; no other firm in the world has imbedded the concept of 3d mapping onto nightlife.
Sky management has developed over time a method to keep them on track with their objectives. They start with a market analysis, involving SWOT amongst others, and 14 | P a g e
then they move into studying the product they can offer and tweaking it, then implementation, followed by control. This whole process can take a lot of time. The one is still in planning phase since 4 years and they are hoping to start development phase in two years. Planning is so extensive, partly because of the high investment cost involved and partly because brand image can suffer greatly with one failed project.
We were offered very little to work with, when it came to SWOT analysis. Many documents where secretive and the manager couldn’t reveal any significant information. However he stressed immensely on the importance of the tools used for planning namely SWOT and 5 forces amongst others.
Conclusion:
It was very interesting working with sky management. Why this firm had as much success as it did was intriguing for all team members. Contacting them, they were very professional. We met onsite briefly and the manager explained that he will be later available for phone calls and email, he also gave us his assistant’s number for any extra information we needed. Sky management looks and functions like a firm from a developed country, out of place. We found out that it is mainly due to proper implementation of strategic management. Detailed planning is done, most firms here barely do any, and if they do very few stick to it. Sky management has been on track of their objectives ever since they started up, working towards the same vision, with planning, implementing and controlling. They have made and maintained strong relationships with clients and suppliers, created a team of intelligent motivated employees. All this has made it a leader in the region and has put the name of its clubs and restaurants on the world map.
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Appendices:
Interview:
1. Describe Sky Management’s Corporate Strategy.
Our main concern and focus while designing any of our strategies is to stand out from the pool of competitors and be able to offer services that are new to the market. Innovation is our weapon. Our commitment and loyalt y to always exceed our customers’ expectations drive us to always challenge ourselves to achieve the unobtainable.
2. Where does Sky Management stand in terms of innovation? Sky Management’s main strengths include its commitment to provide unmatched services through state-of-the-art technologies, architecture and managerial expertise. Innovation has always led our philosophy of thinking. 3. How do you find Sky Management’s current competition state in relation with the existing and new entrants to the market? What is the competitive strategy you follow?
There is room for many players in the market and different target clientele to explore. Tastes and preferences differ amongst people. Satisfying this huge market requires a large variety of hospitality services. The sector is in a rather healthy state, considering the remaining businesses in the hospitality industry. Many new exciting venues are opening and we are very excited to add our own new venues to the market.
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4. How do you maintain strong relationships with clients? With supplier?
We always try to be transparent with our clients and suppliers. We deliver what we promise and often exceed expectations. The excitement of “what’s coming next” makes the clients come back, some of them more than once a week. Every now and then, we deliver edits and photo selection that reminds our clients of the great moments they spent at our venue or what they have missed on. What we aim on designing is not only a venue or an outlet, but an experience, a full worthwhile experience. With our suppliers we remain consistent in our approach. We select our suppliers very carefully and we are usually very demanding with deadlines and deliverables, and therefore we always respect the deadlines established. Loyalty in our number one value when it comes to choosing who we work with. Short notices, urgent demands, and sudden obstacles arise when managing outlets, hence we target suppliers who are flexible as well.
5. What steps are taken before you move into implementation phase?
This question is highly dependent on the situation at hand. Some projects require fast action and I think the fastest project we developed was 9 months from an idea into the first phase of construction. Other projects require immense research, and any mistake there will lead to the failure of the entire project. The one is our largest project to date and has been under development for four years.
The study includes looking at our internal strengths and we compare ourselves to competition existing and new. Also looking at the Lebanese situation is of great concern, economically and even more politically.
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6. How do you deal with problems with clients?
We have a system set up, a procedure. Firstly you should know our customers are our friends. They are not that many; we can keep track of them. We contact them regularly asking about complaints. Sometimes I do the phone calls myself. Once an issue is raised we take all necessary actions to immediately solve a problem. Any error in the bill for example will have the entire bill canceled. If the client noticed after payment, the full amount will be returned, not just the difference. Larger problems are of major concern. Some comments lead to a meeting with head managers and the CEO in order to fix some structural problem built into our system.
*More questions were asked but in the form of a discussion over the telephone. References:
1- The Historical Development of the Strategic Management Concept Jeffrey Bracker The Academy of Management Review , Vol. 5, No. 2 (Apr., 1980), pp. 219-224 Published by: Academy of Management Article Stable URL:http://www.jstor.org/stable/257431 (http://www.jstor.org/stable/10.2307/257431)
2- Grundy, T. (2006), Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15: 213–229. doi: 10.1002/jsc.764
3- Principles of the application of strategic planning methods Marek Journal of Lisi?ski, Business Economics Mark and Šaruckij Management
Vol. 7, Iss. 2, 2006
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4- Measuring Organizational Cultures: A Qualitative and Quantitative Study Across Twenty Cases Geert Hofstede, Bram Neuijen, Denise Daval Ohayv and Geert Sanders Administrative Vol. 35, No. 2 Science (Jun., 1990), pp. Quarterly 286-316
(article consists of 31 pages)
5- Nigel Piercy, William Giles, (1989) "Making SWOT Analysis Work", Marketing Intelligence & Planning, Vol. 7 Iss: 5/6, pp.5 – 7
6- Michael Goold, K. S. (1996). Managing the multibusiness company: strategic issues for diversified groups. London: Routledge.
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doc_570588702.docx
Management in all business and organizational activities is the act of coordinating the efforts of people to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization
Research Paper on Sky Bar Management
Outline
Theoretical part: ________________________________________________________ 2 Introduction: _________________________________________________________ 2 Literature Review: ______________________________________________________ 4 Definition and Brief History of Strategy: ___________________________________ 4 Strategic Management Practices __________________________________________ 4 Corporate strategy: ____________________________________________________ 5 Competitive strategy: __________________________________________________ 7 SWOT Analysis ______________________________________________________ 8 Practical part: _________________________________________________________ 10 Overview of the Company: _____________________________________________ 10 Size _______________________________________________________________ 11 Values _____________________________________________________________ 11 Mission ____________________________________________________________ 11 Vision _____________________________________________________________ 12 Competitors _________________________________________________________ 12 Managers description: _________________________________________________ 12 Analysis of field work: ________________________________________________ 13 Conclusion: ___________________________________________________________ 15 Appendices:___________________________________________________________ 16 Interview: __________________________________________________________ 16 References: _________________________________________________________ 18
1|Page
Theoretical part:
Introduction:
Strategic management is defined as an area that handles main proposed and developing initiatives taken by managers on behalf of owners. These involve various ideas such as the utilization of resources and the improvement of the firm’s performance in their external environments.
Strategic Planning is an inclusive practice used to determine what a business should develop and how it can best achieve its goals. It evaluates the full potential of a business and clearly relates the business's objectives to the actions and resources required to achieve them. Strategic Planning consist of 7 different tools, 3 of which we’re going to discuss.
12345678-
SWOT Analysis Competitive Analysis PEST Analysis Scenario Planning Goals Grid Supply Chain Analysis Using focus groups as part of strategic planning The STP (Situation- Target- Path Model)
To begin with, competitive analysis consists of taking those that compete in your market place into consideration, and using information about your competitors to affiliate where your strengths are comparative to those of competitors. One of the philosophies
2|Page
that lead to becoming competitive is to leverage your strengths and lessen your weaknesses with respect to competitors.
Furthermore, SWOT analysis is a method widely used in strategic planning, it revolves around the evaluation of the internal and external environments of the firm in order to better view its position in the market. Both the external and internal environments are composed of two parts, the internal consisting of strengths and weaknesses and the external of opportunities and threats. Strengths represent the characteristics of the business, or project team that give it an advantage over other whereas weaknesses are characteristics that place the team at disadvantage relative to others. Threats are external elements in the environment that could cause difficulties for the business or project, while opportunities represent external chances to improve performance in the environment. As a final point, Scenario planning, the “what if” process. It is known to be a very logical and sensible process. It mainly revolves around the future where people anticipate possible events, scenarios or changes, and analyze what could happen to the corporation due to those predictions taking place. Also, planning to minimize any damage, and maximize opportunities. The rationale behind choosing these topics is the fact they’re incredibly significant. They aid management in understanding what needs to be done in order to improve the company’s position in the market place. Not only does it help the company evaluate its performance, but it also assists in understanding their competitors. It is used to comprehend their competitive advantages and disadvantages, the competitors past, present and future strategies and it enables the identification of gaps in the market for products, services or initiatives. In addition to understanding competitors, it tends to provide enhanced predictions for the future, which allows management to make better and faster decisions. Furthermore, it tends to improve capital management more efficiently, which ultimately improves the return on equity.
3|Page
Lebanon is one of the most striking countries in the Middle East. It is renowned for all its amazing historical sites and nature. Tourism is one of Lebanon’s strongest sectors where nightlife and hospitality structures a large part of it. We chose Sky bar because it is ranked number one lounge in Lebanon. Our main objective was to expose the reason behind all this success, and whether this corporation implements the concept of strategic management and planning.
Literature Review:
Definition and Brief History of Strategy:
Strategy is an indelible plan of action designed to accomplish a specific goal. The theory, however, was not initially made for business but, the business industry borrowed it from the military to facilitate organizations in closing the gap between policy and tactics. Strategy is a word modified from the word “Strategia” in Greek. It is defined as generalship, which concerns the deployment of troops in the military. Throughout the years, the concept of strategy has been used in various industries, including business and politics, and began to be defined as the job of top management, which is of great significance to the firm. The concept of strategic management in business application advanced into two mainstreams of theoretical approaches, content and process. Content view of strategy almost completely focused on the internal analysis of the company, while the process view of strategy concentrated mainly on the procedure of managing amendment and competition. Strategic Management Practices Strategic management according to Fred R. David, a business strategy author, is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives. It consists of the official 4|Page
method or set of procedures that are used to establish the strategies for the organization. It concentrates on numerous fields; which include the incorporation of management, marketing, finance/ accounting, operations and computer information systems. Strategic management assists the firm in fulfilling one of its major objectives, success, by formulating diverse strategies, implementing them and evaluating the results. 1- Identify organizations goals, missions and strategies. 2- Perform internal analysis, strengths and weaknesses, and external analysis, threats and opportunities. 3- Formulate strategies 4- Implement strategies – marketing, finance, accounting, R&D, MIS issues 5- Implement strategies – management issues 6- Generate, evaluate and select results. 7- Establish Long-Term Objectives 8- Develop Mission and Vision Statements
Basically, strategic management consists of three parts, strategy Formation, Strategy implementation and strategy evaluation
Corporate strategy: Corporate strategy is defined as the direction and the general range of an organization and the method in which it's numerous business functions work with one another to accomplish set objectives. Corporate strategy is divided into three parts, growth, stability and renewal. Growth, where the company focuses on the main line of business and on the practice of augmenting the number of products offered and markets served. Stability, is used when executives aim to preserve the status quo or the "state in which" to handle the doubtfulness of a constantly changing environment. Finally, renewal strategy where managers develop strategies to avoid company weaknesses that tends to lead to
5|Page
performance deterioration. Growth strategies are divided into several parts, namely concentration, vertical integration, horizontal integration and diversification. Concentration is when a company makes effort to increase its product offered or markets served. Vertical integration is divided into two parts, either backward vertical integration where the company attempts to take control over its suppliers, or forward vertical integration, where the company attempts to gain power over its output by becoming its own distributor. Horizontal integration, on the other hand, is when a company starts working with another company in the same industry in order to produce better quality products and decrease rivalry. Finally diversification is of two types, related and unrelated. Related diversification is where the organization expands by merging with diverse but related industries. Conversely, unrelated diversification is when a company unties with a different firm and in an unrelated industry. Corporate image is built on a range of factors. One such factor is the vision mission statement of a firm. This assists the firm in setting up its long-term goals. Another factor would be dependent on whether the corporation satisfies its economic responsibilities towards the public. Such responsibilities include customer satisfaction, earning a fair return on funds commended to the company by its investors, create jobs, and endorse innovation and diversity. Moreover, the firm should operate under or follow rules and regulations that are set by the government. Also it should be very ethically responsible, where they use practices that are tolerable by the society and the business world. Numerous studies have verified that an undesired corporate image would be one with negative corporate social responsibility. Industry surveys conducted imply that a large percentage of consumers will switch to products that reflect more concern about the community, for example. In other words, negative corporate image can have damaging effects on overall product valuation, whereas positive associations can enhance product assessment.
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Competitive strategy: A competitive strategy refers to how an organization competes in a certain business. A company that is involved in only one line of business, the way it competes in its main market will be described in its competitive strategy. On the other hand, if the company has more than one line of business, each line will have its own competitive strategy that will be used to describe its competitive gain, the commodities it will put forward and the customers intended. Competitive advantage is acquired by either implementing a cost leadership strategy differentiation strategy or a focus strategy. A differentiation strategy is where the organization differentiates its offerings from rivalry's offerings by, for example, being more innovative. Cost leadership strategy is where the organization presents lower prices than its competitors. And finally, focus strategy is where the firm applies the previous strategies on certain segment rather than the whole market. Other methods of gaining competitive advantage can be achieved by several approaches. Some of which are, forward integration, backward integration, horizontal integration, market penetration or seeking a larger market share, market development or introducing same offerings to new geographic areas, product development or the process of improving existing offerings, concentric diversification, horizontal diversification, retrenchment, divestiture and liquidation. Porters five forces model was introduced year 1979 by Michael E. Porter, graduate of Harvard business school. It is a structure for industry study and business strategy. It states that there are five competitive forces, threat of new entrants, threat of substitutes, bargaining power of buyers, haggling power of suppliers and of course current competition.
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SWOT Analysis
SWOT analysis, as mentioned above, revolves around the evaluation undertaken by the management of the firm, of the internal and external environments of the firm in order to better view its position in the market. It consists of an external and internal assessment. The rationale behind external analysis is to establish opportunities that could be advantageous to the firm. This comprises of the assessment of legal, political, environmental, economical, social and technological (PESTEL) benefits and drawbacks of the organization and adjusting the needed. Conversely, an internal appraisal consists of the evaluation of internal performance of the company, for instance, the constancy of its management system. The external business environment's dilemma with competitive advantage led to the initiation of Porters five forces model. His theory of competitive gain tends to centre geographical industrialization and innovation in the process of development and competition. Porter mentioned four properties in this theory. He started with factor conditions, which fundamentally refers to a country's place on factors of production. These are essential in order to compete in a set industry. He also discussed demand conditions, which is defined as the normal demand (national or local) for tangible and intangible products. Another characteristic would be related and supporting industries. It relates to the existence or nonexistence of supplier industries and additional associated industries that compete on an international level. Finally the last attribute would be firm strategy structure, which has a propensity to determine the situation in the country governing how organizations are established, organized, and run. Porter's model has been criticized mainly because it did not include the effects of culture and politics on competitive advantage. It also fell short when it came to presenting an inclusive explanation on the formation of clusters. Not only did it fail explain cluster formation, but it also did not mention the competitive gain that comes from alliance or strategic alliance.
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Internal analysis consists of the evaluation the company's strengths and weaknesses. People, Resources, innovation, marketing operations and finance (PRIMO-F) are the tangibles that are to be assessed. Intangibles are tougher to analysis due to the fact that they are not measurable. Employee skills, culture and corporate reputation are examples. During the internal analysis of the firm, managers are concerned with two explicit illustrations, the issue of culture and staff management. One way of assessing culture is the observation of its value dimensions. As elaborated by Geert Hofstede, there are several cultural value dimensions. Some of which are, large power distance versus small power distance, individualism versus collectivism and Masculinity versus femininity. Firstly, Large versus small power distance. Large power distance is defined as the degree to which members of a community accept that power in establishments is allocated unequally. On the other hand, small power distance is the extent to which it’s distributed fairly. Secondly, individualism versus collectivism. Individualism is the habit of being independent or self-reliant. However, collectivism is the principle of giving group precedence over the individuals in it. Thirdly, Masculinity versus femininity. Heroism, assertiveness and material success are related to masculinity. On the other hand, relationships, modesty, caring for the weak and quality of life are associated with femininity. In order to accomplish a successful SWOT analysis, managers should be especially realistic in terms of strengths and weaknesses. Differentiation between the organizations current standpoint and its possible future position should be made. Specificity is very vital to achieve accurate analysis, where analysis is made in relevance to competition. Complexity should be avoided by keeping SWOT short and straightforward. Finally, opportunities and strengths that are available for competitors as well as the organization should not be listed.
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Practical part:
Overview of the Company:
The concept behind sky management started off a while back, with a lounge called sky bar on the roof of the Palm Springs hotel. The place was a success however sky management, as a firm did not exist back then. Two years after opening the lounge closed and they decided to relocate into a newer better location. Biel was chosen and in the summer of 2006, sky bar Biel opened its doors for the first time. It seemed like misfortune was following sky bar, 3 days after the hit opening 2006 war broke in Beirut. The owners decided to close for the season, immense losses were taken, and sky bar and sky management was threatened before it even emerged.
In the summer of 2007 Sky bar opened its doors once again, and by the end of summer proved a huge success amongst the best Lebanese clubs. Sky management was formed in order to run this venue, and immediately its name was synonymous with exquisite high-end venues. Sky management quickly expands into surrounding regions by opening two new venues in Egypt by 2008, sky beach a luxurious resort, and sky bar Egypt. Currently sky bar runs a list of venues in the Middle East region, restaurants and clubs mainly. They also take care of getting international artists into the area by having them perform either at concerts or at their venues. Sky management only takes of care of the VVIP section at concerts and provides the same high end service as at their locations. They also signed a contact with the number one chef in Lebanon “Giovanni”, along with the top 12 local djs in Lebanon. Their attention to detail is one of a kind, they work on surprising clients, and exceeding expectations is there motto. After becoming leading in nightlife they are shifting into the restaurant industry. Lisa (Lebanese concept launched in Paris already) and la Creperie (legendary restaurant over 50 years old in a prime location facing jounieh port) are 2 venues under development by sky management right now.
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Sky management believes in being the best at what they do. They focus on exclusivity, attention to detail, and providing the best service. Innovation is a major part of their work “New things keep people coming” says Sky Managements marketing manager. “We are currently working on our largest project to date, a winter night club called “The One”. It will be the most innovative club in the region and one of the most innovative in the world. A new technology called 3d mapping projection will be implemented into the club, blending holographic images into the night life experience.
Size
Sky bar is a medium size company and is actually considered small for the size of its projects and the large area it does business in. HR is one of its strongest assets, along with prime locations in each of the countries Sky management functions in. Values Integrity – Passion – Loyalty Thriving to maintain customer trust. Providing infallibly reliable service; maintaining the clients permanent satisfaction Among sky managements central aims is to maintain high standards of conduct and upright values. Mission
Our primary concern is the long-term satisfaction of our clients. We ensure it through loyalty, consistency, creativity, and extreme attention to detail.
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Vision
Owning and successfully running the top venues in the world, and having a name synonymous with exclusivity and quality around the world.
Competitors
In a country where the tourism sector is most prominent, competition on restaurants and clubs is intense. Sky bar has managed to place itself as a leader, the best club in Beirut many call it. White is the most notable competitor for sky bar Beirut, and are constantly improving. Sky management knows that if they do not offer new concepts year in year out, they will become boring and their competition will overtake them. In terms of restaurants Competition is fierce and comes from all directions. Even “Giovanni” the number one chef in Lebanon, who also happens to work with sky management, runs several restaurants that form fierce competition with sky management’s. Manager’s description:
Managers name Abraham halal Manager’s position head marketing manager at sky management
Abraham halal is Lebanese, born in Lebanon. Since a young age he portrayed interest in the hospitality field and always wants to work in it he went to school in Beirut then traveled to Switzerland and attained a BA in hospitality management from Ecole Hotelier to Lausanne. In Switzerland Abraham fed his passion with experiences that amazed him. His passion grew with time "and is still growing" he says. Wherever he goes he keeps a keen eye on new concepts and ideas, or ones he dismissed earlier, and enriches his knowledge further feeding his passion. "Whenever I travel I'm always looking to try new restraints and pubs. I ask local’s o their favorites, and read guides and check all the places 12 | P a g e
that I can." It forms the major part of any trips and is always the most intriguing. Abraham comments that many people have dreams and they let go of them after going to university they choose the easier path. Ever since he first entered university Abraham insisted that he'd never fall for that. “I focused pin my vision and always thought of ways on how to apply what I learned into the hospitality field." he said. He took 2 internships one in Kuala Lampur and the other in Paris, both in hospitality and both in fine restaurants. After these 2 experiences I fell in love with the job and I was sure I would never work in anything but hospitality. He claims he enriched himself with these cultures along with the culture of every country he has visited, and that made him better at his work. Opportunity lead Abraham slightly off his vision and into the field of consulting however even there he in sited on remaining in his comfort zone and specialized in consulting for food and beverage firms. After that he spends 2 years at the Ritz Carlton hotel, and that sired him even further. Abraham was introduced into sky management informally by being close friends by being close friends with several key members of the sky management team, including the previous marketing manager. He always considered sky management’s work as extraordinary on the global level, and one of a kind when it comes to the region. "Sky management embodied my dreams in the form of a leader in the industry I enjoy my work here and I'm always looking forward for work. That is something only a few people can say.” Analysis of field work:
Sky management has adopted a very interesting corporate strategy. There is no doubt that Sky management is undergoing a growth strategy, and its working. Going into the interview I expected Mr. Halal to reply, “Our strategy is growth and so on” rather he did not. He spent his time talking about the projects being developed at the moment, multimillion dollar investments; he wanted us to understand the level of growth planned. He talked about what we classified as horizontal integration, mergers, and diversification. Sky management has bought several of its competition, most recently the famous la creperie in jounieh. Also Sky management has merged with a very notable competitor, 13 | P a g e
Giovanni the number one chef in the region, to form 2 recently opened restaurants. And finally diversification is routine for sky management. No two venues offer even remotely similar experiences, in the past they moved from nightlife, to restaurants, to catering, to resorts. Even within nightlife, or any one of the categories the diversity is immense.
Sky management does one unorthodox form of vertical integration, in this field many firms outsource the venue management, and sky management doesn’t. “Very few firms run their venues, rather management is outsourced. So us doing our own management, as well as doing other firm’s managements for a fee is partly vertical integration.”
When it comes to image, very few stand better than sky management. The name is known for “perfection”. This is due to the fact that sky management formed their mission and vision and stuck to them; they formulated objectives to guide them through, set up plans, implanted and controlled all while keeping the vision in focus. That is the major reason sky management image is as good as it is today. Sky management also adopts a strong culture that has strict values, further enhancing its performance and image. Also sky management is one of the few firms that adopt CSR in the area.
When it comes to competitive strategy the firm follows a differentiation strategy. Sky bar is constantly changing providing a new experience different from all competition and different from itself in the previous season. The firm focuses on quality and innovation as the main two core competencies giving it its competitive advantage. Sky management also offers exquisite and exclusive services that very few can match. Sky management also competes by entering new markets where competition is weaker, such as Egypt and other places in the MENA region. When it comes to innovation, “The One” is a great example; no other firm in the world has imbedded the concept of 3d mapping onto nightlife.
Sky management has developed over time a method to keep them on track with their objectives. They start with a market analysis, involving SWOT amongst others, and 14 | P a g e
then they move into studying the product they can offer and tweaking it, then implementation, followed by control. This whole process can take a lot of time. The one is still in planning phase since 4 years and they are hoping to start development phase in two years. Planning is so extensive, partly because of the high investment cost involved and partly because brand image can suffer greatly with one failed project.
We were offered very little to work with, when it came to SWOT analysis. Many documents where secretive and the manager couldn’t reveal any significant information. However he stressed immensely on the importance of the tools used for planning namely SWOT and 5 forces amongst others.
Conclusion:
It was very interesting working with sky management. Why this firm had as much success as it did was intriguing for all team members. Contacting them, they were very professional. We met onsite briefly and the manager explained that he will be later available for phone calls and email, he also gave us his assistant’s number for any extra information we needed. Sky management looks and functions like a firm from a developed country, out of place. We found out that it is mainly due to proper implementation of strategic management. Detailed planning is done, most firms here barely do any, and if they do very few stick to it. Sky management has been on track of their objectives ever since they started up, working towards the same vision, with planning, implementing and controlling. They have made and maintained strong relationships with clients and suppliers, created a team of intelligent motivated employees. All this has made it a leader in the region and has put the name of its clubs and restaurants on the world map.
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Appendices:
Interview:
1. Describe Sky Management’s Corporate Strategy.
Our main concern and focus while designing any of our strategies is to stand out from the pool of competitors and be able to offer services that are new to the market. Innovation is our weapon. Our commitment and loyalt y to always exceed our customers’ expectations drive us to always challenge ourselves to achieve the unobtainable.
2. Where does Sky Management stand in terms of innovation? Sky Management’s main strengths include its commitment to provide unmatched services through state-of-the-art technologies, architecture and managerial expertise. Innovation has always led our philosophy of thinking. 3. How do you find Sky Management’s current competition state in relation with the existing and new entrants to the market? What is the competitive strategy you follow?
There is room for many players in the market and different target clientele to explore. Tastes and preferences differ amongst people. Satisfying this huge market requires a large variety of hospitality services. The sector is in a rather healthy state, considering the remaining businesses in the hospitality industry. Many new exciting venues are opening and we are very excited to add our own new venues to the market.
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4. How do you maintain strong relationships with clients? With supplier?
We always try to be transparent with our clients and suppliers. We deliver what we promise and often exceed expectations. The excitement of “what’s coming next” makes the clients come back, some of them more than once a week. Every now and then, we deliver edits and photo selection that reminds our clients of the great moments they spent at our venue or what they have missed on. What we aim on designing is not only a venue or an outlet, but an experience, a full worthwhile experience. With our suppliers we remain consistent in our approach. We select our suppliers very carefully and we are usually very demanding with deadlines and deliverables, and therefore we always respect the deadlines established. Loyalty in our number one value when it comes to choosing who we work with. Short notices, urgent demands, and sudden obstacles arise when managing outlets, hence we target suppliers who are flexible as well.
5. What steps are taken before you move into implementation phase?
This question is highly dependent on the situation at hand. Some projects require fast action and I think the fastest project we developed was 9 months from an idea into the first phase of construction. Other projects require immense research, and any mistake there will lead to the failure of the entire project. The one is our largest project to date and has been under development for four years.
The study includes looking at our internal strengths and we compare ourselves to competition existing and new. Also looking at the Lebanese situation is of great concern, economically and even more politically.
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6. How do you deal with problems with clients?
We have a system set up, a procedure. Firstly you should know our customers are our friends. They are not that many; we can keep track of them. We contact them regularly asking about complaints. Sometimes I do the phone calls myself. Once an issue is raised we take all necessary actions to immediately solve a problem. Any error in the bill for example will have the entire bill canceled. If the client noticed after payment, the full amount will be returned, not just the difference. Larger problems are of major concern. Some comments lead to a meeting with head managers and the CEO in order to fix some structural problem built into our system.
*More questions were asked but in the form of a discussion over the telephone. References:
1- The Historical Development of the Strategic Management Concept Jeffrey Bracker The Academy of Management Review , Vol. 5, No. 2 (Apr., 1980), pp. 219-224 Published by: Academy of Management Article Stable URL:http://www.jstor.org/stable/257431 (http://www.jstor.org/stable/10.2307/257431)
2- Grundy, T. (2006), Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15: 213–229. doi: 10.1002/jsc.764
3- Principles of the application of strategic planning methods Marek Journal of Lisi?ski, Business Economics Mark and Šaruckij Management
Vol. 7, Iss. 2, 2006
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4- Measuring Organizational Cultures: A Qualitative and Quantitative Study Across Twenty Cases Geert Hofstede, Bram Neuijen, Denise Daval Ohayv and Geert Sanders Administrative Vol. 35, No. 2 Science (Jun., 1990), pp. Quarterly 286-316
(article consists of 31 pages)
5- Nigel Piercy, William Giles, (1989) "Making SWOT Analysis Work", Marketing Intelligence & Planning, Vol. 7 Iss: 5/6, pp.5 – 7
6- Michael Goold, K. S. (1996). Managing the multibusiness company: strategic issues for diversified groups. London: Routledge.
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