Literature review
The current report presents the insights gained from a simulation on Edumundo. The simulation involves running a fictional tourism and travel business for four weeks to improve the performance of the firm. The firm name selected for the fictional business is “Chasing Sunsets Tour Operator”. At the time of the start of the simulation, the company had been operating modestly for two years. Three managers were involved in the decision-making- they are the marketing manager, the general manager, and the human resource manager. Essentially, a team effort was required to ensure success as measured by the key performance indicators of the simulation. The current report is written from the perspective of the HR manager.
Decisions were made through consideration of the potential outcomes and backed by decision theory, management, and an understanding of the tourism sector. The next section presents the literature review that acts as a theoretical basis for the project. For instance, the current report incorporates ideas of how human resource management in tourism consultancy is changing. Specifically, Baum(2015) argues that HRM in tourism consultancy has had to reckon with issues such as ICT, diversity, and globalization. The impact of the latter mentioned factors on the HRM decisions made in the simulation is discussed in subsequent sections. The literature review is followed by a detailed discussion of the case study of Chasing Sunsets Tour Operator”. This involves the extraction of insights from the simulation conducted in Edumundo. The fourth section presents the findings gained from the simulation alongside the associated discussion. The final section of this report presents the recommendations and conclusions.
A tourist consultant is a company that coordinates and books a vacation for people, teams, and corporations (Ruhanen, et al., 2021). They provide their clients with more specific services than tourism agencies. Tourism consultants can help a business to succeed by transferring crucial knowledge to the businesses (Ruhanen, et al., 2021). Businesses can use the knowledge to understand the market better or improve their management of different aspects. Tourism consultants can aid businesses to succeed by filling gaps in knowledge by participating in the process of generating insights.
According to Ruhanen, et al.(2021), the role of tourism consultants has been changing over the years. Specifically, there has been a shift from a focus on the transfer of knowledge to clients to direct involvement in the creation of knowledge by tourism consultants (Ruhanen, et al., 2021). Therefore, a successful tourism consultant ought to be flexible and adaptive to change. Currently, there is an increased focus by tourism consultants to make decisions based on the preferences, attitudes, and demands of the users of clients (Ruhanen, et al., 2021). Therefore, successful tourism consultancy needs to be user-driven.
Three roles were involved in the decision-making- they are the marketing manager, the general manager, and the human resource manager. According to Banton, et al.(2020), the role of a general manager involves overseeing all or part of a department’s or the firm’s activities, especially profit-making and cost control. On the other hand, Langhe(2016) links the role of a marketing manager to researching and predicting market conditions, managing relationships with clients, and making decisions related to the marketing of an organization. Lastly, the human resource manager role is defined by Tiwari(2013) as an individual who is responsible for overseeing the workforce of a firm and the working conditions. The specific activities of a human resource manager are to hire and fire employees, to take in employee queries, assign duties and facilitate the linkage between employees and the other managers.
Case study of Chasing Sunsets Tour Operator
In the current context, the marketing manager was in charge of promoting the services of a firm to clients and potential clients. This involves the use of advertisement and other marketing tools. The marketing manager role was selected for the simulation because the fictional company was lacking in terms of branding. The general manager was tasked with the responsibility of daily operations at Chasing Sunsets Tour Operator. Lastly, the human resource manager was tasked with linking the personnel of the firm with the organization’s leadership. The specific tasks involve hiring and firing personnel among other personnel administration tasks.
I was tasked with the human resource manager role. According to Patrick & Mazhar, (2021), the purpose of an HR manager is to enhance personnel performance and protect the firm from work-related difficulties. The specific tasks I was charged with include the administration of benefits and compensation, hiring and benefits and compensation, hiring and firing, and maintaining current and relevant rules that may concern the entire workforce. The HRM role is important for “Chasing Sunsets Tour Operator” as it serves as a link between the leadership of the company and the personnel of the organization. The HRM role was fulfilled through different actions that influenced the personnel of Chasing Sunsets Tour Operator.
The company we were tasked to manage in the simulation was Chasing Sunsets Tour Operator. The firm was making losses when we first took over. The first step involved examining the key performance indicators of the firm to assess its performance. Because three people were involved in the project, the different tasks were coordinated. Firstly, we identified the hotels that were a liability to the Chasing Sunsets Tour Operator. These were the most evident before other issues were identified. Afterward, we observed that the costs structure of the firm was contributing to the lack of profitability and growth. Before embarking on the project, we reviewed a myriad of theories and scholarly publications. For instance, we extracted insights from the article by Woodward(1976). In the article, Woodward(1976) cautioned against aggressively seeking growth as it can lead to losses. Woodward(1976) pointed out that downsizing of firms is the most suitable strategy to avoid losses.
Additionally, Woodward(1976) cautioned against using marginal and break-even accounting as they encourage seeking unpropertied growth that may lead to increased losses. In line with the suggestions of Woordward(1976), the team realistically approaches growth. Specifically, the three hotels that were detrimental to the profitability of the firm were eliminated from the portfolio. Similarly, Band & Tustin, (1995), proposed the use of “strategic downsizing” to improve the outcomes of a business. Therefore, the current report sought to eliminate non-performing hotels from the portfolio of Chasing Sunsets Tour Operator.
In addition to the insights gained from scholarly sources, the team also deployed several frameworks to conceptualize the internal and external environment of Chasing Sunsets Tour Operator. In detail, the team used a SWOT analysis, PESTEL analysis, and Porter’s Five Forces analysis to understand the company better. The aforementioned analyses were conducted for every operational week to examine the progress of the firm. The insights gained from the analyses were used to inform the strategy of the management team.
Findings and discussion
SWOT analysis entails the strengths, weaknesses, opportunities and threat in a company. SWOT is a tool used by companies to evaluate their competitive position and help the company to come up with a strategic planning by analyzing the current, future, external and internal factors. The strengths explains what a company excels in and make it have more competitive advantage. Weaknesses limits a company from performing to its best level, and they are the areas that a company need to improve to gain competitive advantage. Opportunities are the favorable internal and external factors that makes a company to be competitive. Threats are the factors that could harm a company (Fine, 2009).
According to Yusop (2018) PESTEL analysis is a tool used to evaluate the internal and external environment of a company by analyzing the risks and opportunities into political, economic, social. Technological, environmental, and legal factors. It’s a framework used to identify the advantages and disadvantages of a business plan, and the knowledge acquired from PESTEL analysis can be incorporated in porters five forces and SWOT analysis.
Porters five forces is framework used by companies to gain competitive advantage by examining the company’s strengths and weaknesses. The porters five forces are: competition in the company, potential entrants into the company, power of suppliers into the company, power of consumers into the company, power of consumers into the company and the threats of substitute products.
For instance, the SWOT analysis showed that the firm had a modest satisfaction level in terms of employees and customers. In addition, it was observed that Chasing Sunsets Tour Operator had a highly adaptable team of personnel. The main weaknesses were linked to the loan that Chasing Sunsets Tour Operator had and the overwhelming amount of information that the team had to acquire. The opportunities we observed were the opening of new markets such as Italy. Lastly, the primary threats to Chasing Sunsets Tour Operator were related to the political situation in the operating countries such as Spain which could lead to labor strikes and affect the performance of the firm. In line with the SWOT analysis, the team adjusted the strategy to take advantage of the opportunities and strengths of the firm. We also adopted measures to address the weakness and cushion the firm against the threats. Consequently, the PESTEL analysis indicated that the tourism sector was largely affected by politics. Additionally, it indicated the economic potential of the British market which had a value of € 257 billion. The preceding indicated that Chasing Sunsets Tour Operator could gain significant profitability if the appropriate strategies are deployed to recruit customers. Lastly, Porter’s Five Forces analysis indicated that there was stiff competition in the tourism consultancy industry. It also indicated that there were substitute services that posed a significant threat to the profitability of Chasing Sunsets Tour Operator. Therefore, the team considered the implications of the strategy on the firm given the outcomes of the analysis from the latter three tools.
Week One
In the category Result for 2020, the team noticed from the Balanced Scorecard, that the business had negative profits in several areas. These include profit, customer satisfaction, and internal variables. Additionally, the business was lacking in terms of employee satisfaction and work pressure. In detail, there were two hotels in Tenerife that were losing money and would not make a profit. The team classified the loss-making hotels as liabilities and decided to close them. The team also sought alternative avenues of making a profit such as the new collaboration with a four-star hotel in Barcelona. Table 1 below summarizes the decisions made in the first week in the different categories of the simulation.
Recommendations and conclusion
Table 1. The Decisions of Week 1;( source: Author)
|
Category |
Decisions Made by the Team |
|
Personnel satisfaction |
The team opted to maximize the satisfaction of the firm’s employees by reducing the work pressure. As an HR manager, I did not assign excessive tasks to employees especially in the normal or low seasons. I also allocated incentives such as bonuses, discounts, and education to improve the employee satisfaction rating. |
|
Customer |
The team found that education is essential for the employees of the business. This added to the customer satisfaction as well-trained employees had adequate knowledge, etiquette, and resourcefulness in the delivery of services. The team made the decisions with the understanding that an employee who feels good and has enough knowledge will positively influence the client. Therefore, the decisions involved purchasing a complaint settlement and influencing the education of personnel. Again, this was an HR task hence a primary responsibility of the HR manager. |
|
Management |
We observed that two hotels were operating at a loss from 2020. Therefore, the team decides to remove them from the portfolio of the business. Afterward, the team tried to extend the business in Tenerife because it was the only open market for the first week. We developed the company with another two hotels |
|
Marketing |
We determined that the booklet was too pricey for the company’s marketing strategy and erased it. Instead, we used the funds to promote ourselves through prominent websites, internet search engines, E-brochures, and billboards. |
Week Two
In the second week, the team noticed that one hotel had increased its profit. Specifically, Paradiso had a profit of €2,178. The team decided to focus on improving the personal satisfaction and pressure of work. These were decisions closely tied with the Human Resource Manager role. The dimension of profitability was allocated to the General Manager while the marketing decisions were undertaken by the Marketing manager. The failures of week one were linked to Muy Barato with losses of 21,417, Dormir y Roncar with losses of 27,157, and A la Platja with losses of 27,422. The mistakes made in week one were evident in week two. Table 2 below summarizes the mistakes we made in week one.
Table 2. Decisions made during Week Two; (source: Author)
|
Category |
Decisions Made by the Team |
|
Distribution |
We did not use a tour operator committed agency / Electronic res. No call-Centre |
|
Marketing Research |
There was inadequate information about marketing research about our competitors. For instance, the team was not aware that Family was the first good client for tour operator after Couples. In addition, we did not buy market demand for beds and the usage of the distribution channel. |
|
Hotels |
There were mistakes made concerning the Muy Barato hotel. The team decided to offer transportation because the hotel was popular with children. Keep the hotel in Barcelona: because on Occupation we did very well. We kept only ten beds with five guaranteed. The used marketing attention is Remarkable, not Basic. We offered a discount, 15% for youth and 10% for seniors, for last minutes. The team also kept Paradiso because it was profitable The team chose to use Private transportation because the first week was ‘Owned transportations’. We offered a discount, 10% for youth and 15% for seniors, for last minutes. We eliminated Muy Barat due to poor performance. |
|
Messages |
The situation in Spain was unstable. The team was expecting budget cuts as authorized by the local governments. The budget cuts will affect the salaries of government personnel and unemployment. They will also affect public services, transportation, and police departments. Political analysts are expecting strikes. |
|
Purchase |
The team opted to maintain only two hotels in Spain, two in Tenerife, and one in Barcelona. |
|
Distribution |
The team changed to the electronic reservation and used a tour operator to sell out tickets allocating 17%. |
Week Three
The team continued identifying issues regarding our decisions from week 2. Because of that, we have a significant problem with the Profit. For instance, there were poor results on the Degree of occupation and Market share. Because of that, we decided to make some changes. Firstly, the team decided to increase the number of hotels. The goal was to increase the revenue and the performance in relevant KPIs. Increasing the number of hotels meant that more personnel were required and a reduction in the number of beds. The team also increased the prices of beds in the low season.
Table 3. Decisions made during the first three weeks;( source: Author)
|
Category |
Decisions Made by the Team |
|
Purchases |
We ought to have more hotels. The prices, especially for Low seasons, are too low. We need to put the price higher. We took too many beds. |
|
Promotion |
We did not use holiday fair |
|
Decisions |
We will gain more hotels. We put the prices higher, especially for low seasons. We decrease the number of beds in each hotel. |
|
Degree of occupation |
If we have expensive rooms and we will not sell them, we will not have Profit, and also the Degree of occupation will be very low.) if we have cheaper rooms and we sell in good proportion the rooms, we will have Degree of occupation very high, but also no profit because we will have a lot of expensive things to cover. If we will have a better result for the Degree of occupation category, we will increase the Market share as well, the same with Profit. In the locations we have already, we have too many competitors, and we need to enter new markets and gain more hotels. The more, the better. A lot more hotels help to Increase revenue. The price is too low, consider all the items that we offer to our customers. |
Week Four
The team sought to provide new destinations and more hotels to our old and future customers. Additionally, we wanted to improve the quality of the business services as well. The aforementioned strategies were meant to increase our Profit and revenues as well. In the last three years, we managed to grow our company, but we still have problems in the profit area. Because of that, we decided to expand how much we can do our business in all the cities, but mainly there where we know we have excellent opportunities. The specific decisions are presented in table 4 below.
Table 4. Decision Made in Week Four;( source; Author)
|
Category |
Decisions Made by the Team |
|
Messages |
After reading the market research from the game, the team decided on the following. The labor strike finished in Spain thus, the team decided to take more beds. A new virus from the water pollution hit Tenerife, Majorca, and Ibiza thus, the focus is Barcelona therefore, the team increased the number of beds in Barcelona. The team also increased the number of beds in Lazio because the market research indicated that tourism levels would increase in Lazio. The market research indicated that Egypt tourism will increase, therefore, the team increased the number of beds. |
|
Hotels |
Concerning the hotels which did not work as expected from week three- thus, the team decided to remove the Baleric Hotel in Spain from the portfolio. For Ca Lucrezia, we use ‘own transportation’ and ‘basic’ marketing attention and no discount for ‘last-minute. Also, in Grace, for Papapoulos hotel, we changed to ‘own transportation’ and no discount for last minutes. And for Jessus Crete, we decrease the number of beds. |
Given the results of the simulation throughout the four weeks, Chasing Sunsets Tour Operator still had a relatively poor performance. The responsive strategy deployed in the management of the firm did not perform well as the firm kept incurring losses in different hotels. Therefore, the current report recommends the downsizing of the organization in terms of the number of hotels. According to Woodward(1976), companies should not seek growth just for the sake of it. The strategy is also proposed by Cascio(2009) who recommended reducing the number of employees and unproductive divisions in an organization to achieve profitability. The strategy is also proposed by Appelbaum, et al.(1999) who identified downsizing as a critical factor to the success of businesses.
Therefore, instead, growth should be pursued practically and cautiously. For instance, the decisions the team made related to the acquisition of new hotel destinations- however, the business kept underperforming. Therefore, the current report recommends downsizing the organization. As the HR manager, downsizing involves the reduction in the number of employees. For the General Manager, this includes closing down problematic hotel destinations and cutting down operational costs. For the marketing manager, downsizing involves optimizing the advertising of the firm to reduce the expenditure and return the firm to profitability. The current report also recommends the addition of the role of a finance manager to ensure the appropriate budgetary controls are in place.
Conclusion
The preceding content discussed the simulation conducted in Edumundo on the fictional company known as Chasing Sunsets Tour Operator. The introduction section presents the three roles that were undertaken in the management. They are the HR manager, the general manager, and the marketing manager. The roles were selected for their appropriateness and the situation at which the company was found at the start of the simulation. The literature review section presented definitions of the different roles, especially the role of the Human Resource manager. It also briefly explained the specific responsibilities of the three managers. The literature review also highlighted the ideas that informed the decisions in the simulation. The case study section detailed the simulation and decisions that were made. The findings elaborated the outcomes alongside the justification for each week. The current report recommended downsizing as the most appropriate approach to profitability for Chasing Sunsets Tour Operator.
References
Appelbaum, S., Hung, L. T. & Everard, A., 1999. Strategic downsizing: Critical success factors. Management Decision, 37(7), pp. 535-552.
Band, D. C. & Tustin, C. M., 1995. Strategic downsizing. Management Decision, 33(8), pp. 36-45.
Banton, C., Costagliola, D. & James, M., 2020. What Is a General Manager (GM)?. [Online]
Available at: https://www.investopedia.com/terms/g/general-manager.asp
[Accessed 20 January 2022].
Baum, T., 2015. Human resources in tourism: Still waiting for change? -A 2015 reprise. Tourism Management, Volume 50, pp. 204-212.
Bruijl, G.H.T., 2018. The relevance of Porter’s five forces in today’s innovative and changing business environment. Available at SSRN 3192207.
Cascio, W. F., 2009. SHRM Foundation’s Effective:Employment Downsizing and Its Alternatives, s.l.: SHRM Foundation.
Fine, L.G., 2009. The SWOT analysis: Using your strength to overcome weaknesses, using opportunities to overcome threats. Kick it.
Langhe, B. d., 2016. The Marketing Manager as an Intuitive Statistician. Journal of Marketing Behavior, 2(2-3), pp. 101-127.
Patrick, P. & Mazhar, S., 2021. Core Functions of Human Resource Management and its Effectiveness on Organization: A Study. International Journal of Social Economics, 9(5), pp. 257-266.
Ruhanen, L., Saito, N. & Axelsen, M., 2021. Knowledge co-creation: The role of tourism consultants. Annals of Tourism Research, March.87(103148).
Tiwari, M. D., 2013. Strategic Human Resource Management at Tertiary Level. s.l.:River Publishers.
Woodward, H. N., 1976. Management Strategies for Small Companies. Havard Business Review, January.
Yusop, Z.B.M., 2018. PESTEL analysis. COMRAP 2018, p.34.
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