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International Tourism And Hospitality Management

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Question:

You have to choose organization (come up with business strategy)-what are they using strategic strategic options -is that good or bad -what is bad and recommendation.
 
 

Answer:

Introduction

Sustainable development refers adopting new business strategies for meeting the needs of the organisation and its stakeholders. The organisations need to protect, enhance and sustain the natural and human resources to meet the needs of the future (Larson 2017). In this report, Jeju Shinhwa World organisation has been chosen in order to showcase the sustainable business strategy. Sustainable development can be defined as pervasive philosophy and each of the organisations need to subscribe this. In this report, the business strategy of Jeju Shinhwa World has been explained using both primary and secondary data. The aim of the report is to highlight the strategic options available for Jeju Shinhwa World and its associated risks. In the final section, recommendation and justification of the best strategic option for Jeju Shinhwa World have been given. In this report, marketing strategies, financial reports and distribution channels of information have also been given. 

Overview of Jeju Shinhwa World

Jeju Shinhwa World is a prestigious and exciting world-class resort and it is located in Western part of Jeju Island, South Korea. This resort is developed by Landing Jeju Development Corporation. This resort is one of South Korea's best-integrated resorts and it is spanning across approximately 2.5 million sq-metres (Shinhwaworld.com 2017). In addition, total investment has been made US$ 1.8 billion. This resort provides world-class entertainment and leisure facilities which can be enjoyed overseas and local visitors of all age groups.

Markets Size

Leisure tourism is a purpose built building and it is generally created for the relaxation of the guests by giving various facilities to them. Leisure market can be further segregated into gaming centre, resorts, health and fitness, clubs, theme parks and sports club. In a global perspective, leisure market is a part of hospitality and it is expected to see a positive growth between 2017 and 2021 due to acceleration in consumers' perception in recreational and leisure activities (Ghosal 2017). Moreover, people in developed and developing countries are experiencing rising disposable income and people's standard of living is also increasing. Leisure market can play a significant role in gaining multiple employment advantages and it can make positive impact simultaneously on the economic growth in the global arena. In Asian perspective, changing the lifestyle of the people and increasingly sophisticated customers fuel the hospitality industry. Owners of the hospitality organisations focus mainly on promotional activities and branding. Jeju Island is a famous leisure market for Japanese and Chinese people. In 2016, Korean tourism gained approximately US$ 15.6 billion from tourism. In Jeju Island, maximum visitors were Japanese (24%), Chinese (11%) and American (9%) in 2016 (Eturbonews.com 2017).          

Products and services

Jeju Shinhwa World is an integrated resort and it is South Korea's largest resort. This place is stretching a vast place. This hotel provides easy access to various attractions in Jeju Island and it also provides exclusive privacy in villas with sauna, gym, treatment room, dining and spa. This resort has more than 900 villas and it offers villa size ranging from 154 sq-metres to 1458 sq-meters. 

Somerset Jeju Shinhwa World offers expansive 3-bedroom units with decorated interiors that are furnished beautifully.  Jeju Shinhwa World provides exquisite hotel experience with more than 2000 rooms for the family services and for VIP treatment.

Jeju Shinhwa World provides experiences of Korea’s 3D animation with 15 exciting amusement and rides. These rides have been planned by Korea’s TUBAn Corporation and it has popular animated characters like larva, Rotary Park and Oscar’s Oasis (Shinhwaworld.com 2017).

Jeju Shinhwa World offers the finest water park with massive 13,000 sq-metres. It provides fun experiences and thrills for the families and children. It is featured in the wave pool, adult pools, toddlers' pool and water slides. Guests can take rent of cabanas.

Jeju Shinhwa World is going to offer outdoor movie theme park experience to the guests and it is going to provide state-of-the-art-rides to the customers, additionally, it will provide services like themed dining, shows and retail experiences with some of the world’s most popular films.

Mission statement

The mission statement of Jeju Shinhwa World is to be committed to providing enjoyable recreation, memorable vacation and safe environment for each guest and staff.

Vision

Providing consistent services through excellence, anticipation and innovation to meet the expectations under changing needs of the guests (Shinhwaworld.com 2017)     

Values

Jeju Shinhwa World believes in change and growth. The values of Jeju Shinhwa World are excellence, going forward with integrity, embracing change and serving the world.

Target customers

An organisation segregates the potential customers into sub-groups according to their nature, buying capacity, demands and tastes (Hamka et al. 2014). Jeju Shinhwa World segments the market into four groups. Geographic segmentation of an organisation is related to the customers’ location and regions. In addition, demographic segmentation of an organisation is related to the age, gender, occupation, income and socio-economic condition of the customers (Floh et al. 2014). Jeju Shinwha World can segregate the customers on the basis of customers wanting values for money, the rate of usage, loyalty status, readiness to purchase and benefits sought. Finally, a psychographic segment of the organisation is related to the personality, lifestyle, attitudes and class of the people.

 
Primary target customers:   

Jeju Shinhwa World targets mainly higher income group that falls under the category of demographic segmentation. Jeju Shinhwa World is a newly launched resort for the tourists who would like to spend a grand leisure in Jeju Island. This resort is expensive and the offerings of the resort cannot be afforded by the lower middle-class people. Therefore, the target customers of Jeju Shinhwa World are higher income group who are ready to spend money for leisure purposes and can enjoy Water Park, villas, expensive amenities and theme park. According to Ang (2014), each of the customers has different desires and needs. People have different income and economic status to measure the perceived value of a product or services.             

Current business objectives

            Objectives of Jeju Shinhwa World are:

  • To attract the tourists to Jeju Island
  • To increase the number of guests visiting Jeju Island
  • To work closely with local communities and stakeholders to form long-term partnership
  • To reach at least 5% profitability by the end of 2018

Financial reports

The director of the Jeju Shinhwa World is responsible for financial reports, in the annual reports of this resort clearly shows the expenses and profitability.

Statement of Profit and Loss:

Operations

2016

Revenue

325,390

Cost of inventories sold

-

Gaming duties

7,299

Amortisation and depreciation

14,800

Employee benefit expenses

59,299

Operating income

3,269

Finance Income

178,373

Change in fair values of financial assets

31,676

Change in fair values of investment properties

287,361

Reversal of impairment

3,991

Profit/loss before income tax

642,257

Income tax expenses

15,278

Profit and Loss for the period from continuing operations

657,958

Disconnected operation

4,579

Profit and loss for the period

662,555

Table 1: Statement of Profit and Loss

(Source: Landing.com.hk 2017)

Financial position:

 

2016 (31st Dec)

Non-current assets

 

Property, plant and equipment

3,437,671

Investment properties

2389,800

Prepaid land lease

13,888

Goodwill

419,045

Intangible assets

1,734,441

Deposits

21,037

Deferred income tax assets

11,763

Available-for-sale financial assets

117,000

Total Non-current assets

5,994,625

Current assets

 

Inventories

52,057

Completed properties sale

 

Properties under development

2,079,841

Trade and other receivables

1,495,283

Amount due from joint venture

87,116

Income tax recoverable

2,716

Cash and cash assets

6,774,501

Total current assets

11,3550,608

Total assets

17,345,233

Table 2: Statement of financial position

(Source: Landing.com.hk 2017)

Marketing reports and distribution channel

Jeju Shinhwa World does marketing through online platforms like social media networks, websites and they do booking through other third-party agency. This organisation is new in the industry and it has been doing strong marketing through using social media networks like Facebook and Instagram. On Facebook, it has more than 49,000 people and more than 51,000 people talking about this on Facebook (Shinhwaworld.com 2017). Through Facebook, this resort shares it reservation details and most of the message they share are in the Korean language. During the survey, one of the respondents shared that this resort shares the information in Korean language and in order to be global, they can share the message and post in the English language. In addition, in Instagram, Jeju Shinhwa World has 27.5k followers and the organisation posted more than 165 images and videos (Eturbonews.copm 2017). Moreover, this resort posted its press releases over websites and most of the people come to know about this resort through a press release. As it is Korea's largest resort, word-of-mouth publicity is observed.

Distribution channels of Jeju Shinhwa World include e-commerce websites, consultants, wholesalers, catalogue sales and direct sales over phones. Distribution channels can dictate the marketing strategy of an organisation (Boons and Lüdeke-Freund 2013). This resort provides food facility to the guests and the distribution channel of this resort is direct. Marketing method and advertising can appeal to customers’ demography. Distribution channels of Jeju Shinhwa World are direct and they are using competitive pricing for the guests.

 

Data relating to tangible and intangible assets

Tangible assets of Jeju Shinhwa World are related to the personal property and Jeju Shinhwa World has more than 2.5 million sq-metres area to build the resort. Office building, machinery, lands, inventory and cars are tangible assets (Campbell et al. 2016). Current assets of the organisation are cash and marketable securities, whereas fixed assets of this resort are plant, equipment and property.         

Intangible assets of Jeju Shinhwa World are associated with the brand name, financial performance and complex chain of supply and distribution. Jeju Island is a well-known name among the tourist all over the world, however,' Jeju Shinhwa World is trying to make the brand name to have a strategic advantage to create financial value in order to generate cash-flow. Extraordinary management of the hotel and restaurant related to the food and beverage sales volume, net operating income and income per available room can enhance the intangible assets of a resort (Ali et al. 2014). Trademark, copyrights, patents and contracts are considered as intangible assets. Jeju Shinhwa World provides motivation to the staff and market value of the resort can also add intangible assets. Regulation of the company policy is done by the leaders, therefore, leaders’ quantification and identification are meant as intangible assets.

Human resource 

In order to run a hospitality sector, it is very much important to train the human resource. Proper human resources can help an organisation to assist in operation management. Jeju Shinhwa World is a large resort and it has so many departments and sections. In each of the section, there is various human resource staffs associated with this. There is more than 3,000 employees work in the resort to handle day-to-day operation to emphasise strategic management of human capital. This resort follows coherent method to gain mutually supportive employment policy and the resort treats staffs as assets for the organisation (Bocken et al. 2013). The managers of the organisation control the human resources and staffs are segmented into groups to do the works. The management thinks that staffs share the same interest in emphasising the principle of mutuality. In managing the villas, the management recruits maximum employees and there is a separate section to make food for the guests. In this section, there are cooks and chefs work under the guidance of the assistant managers. The managers can provide training to the human resources to have clear progression towards the higher level of customer satisfaction (Peteraf et al. 2014).

Outlining the business strategy 

Jeju Shinhwa World started its business recently and it has taken the business strategy of innovation to attract the guests. It is offering various types of activities to the guests like world-class hospitality, gaming facilities, leisure and entertainment to the guests. Innovation in all aspects of hospitality is the business strategy of Jeju Shinhwa World. Jeju Shinhwa World provides exquisite hotel experience where they are offering world class gym, sauna and interesting dining for the savvy globe-trotters (Barkmeyer et al. 2014). They have brought the residential places for the people with stylish and expensive bedroom and world-class interiors. It has introduced spacious lobby lounges for the customers with large outdoor play and children playrooms. On the other side, Disneyland and Resort is another famous theme park located in California, Tokyo and Hong Kong. It takes the business strategy of international outreach as many international tourists come to visit Disney Theme park, therefore they developed hotels and resorts in California (Disneyland.disney.go.com 2017). Disneyland adopted local culture to retain more tourists and take the worldwide expansion strategy. Moreover, another theme park and resort named Universal Theme park takes the rapid expansion strategy with bringing new attractions for the guests. The expansion strategy follows with rapid construction building that brings positive approach for the guests.

 


The strategy of Jeju Shinhwa World is to innovate to stay relevant in the market. Their strategy is to capture the attention of the guests and make constant innovation taking feedback from them. The organisation has already started to provide shopping, entertainment, lifestyle-related commodities and customer satisfaction. This resort provides finest Waterpark experience with more than 13000 sq-metres space. The guests can rent cabanas as well in order to ensure more privacy. Innovation is an important strategy for an organisation in order to ensure the sustainable business (Tabi et al. 2014). During the survey, 45% respondents opined that Jeju Shinhwa World has brought the innovation in introducing outdoor movie theme park that is world class theme park to combine state-of-the-art rides attractions for world’s some of the popular films. It has retail and Food and Beverages complexes in more than 20,000 sq-metres with some of the high-end and mid-end brands. Therefore, this resort caters to the guests’ desires for an innovative experience for the modern leisure travellers. In addition, Disneyland takes the strategy of innovation as a marketing strategy to stay ahead of the competition. Disneyland resorts and theme park always focus on technological innovation. Their storytelling technique in Theme park and resort engage the guests and tourists. Moreover, on the other side, Universal Theme park takes the strategy of using the themes that are licensed of Intellectual Property, for example, they have taken the theme of Harry Potter.

Two strategic options and their risks

Jeju Island has been a tourist attraction for tourists for a long time. Jeju Shinhwa World has opened recently for the tourists. The organisation has been taking two strategic options that would enable the organisation to have sustainable business development.

Differentiation strategy 

In Porter’s Generic Strategy, there are three main strategies, cost leadership, differentiation and focus. Jeju Shinhwa World has taken the differentiation strategy to gain sustainable business. As stated by Barin Cruz et al. (2015), companies are using differentiation strategy in order to target the quality and value-seeking guests with premium offerings. In the hospitality sector, differentiation brings string brand equity for the organisation and competitors take time to duplicate the offerings. Jeju Shinhwa World pursues differentiation strategy to focus on innovation in each of the offerings. It offers 3D movie theme park that is going to give movie experience in outdoor with state-of-the-art services. It has a giant water park and it provides classic villas with excellent amenities. Therefore, Jeju Shinhwa World's strategy is to offer a large variety of services rather than one or aisle. Strategic positioning of Jeju Shinhwa World is to have a sustainable competitive advantage, unique value and core marketing message. Strategic options of differentiation that they are taken are creating the niche market, be remarkable and disrupt and amaze the customers. In case of Disneyland Theme and Resort, they demonstrate the target marketing for sustainable business policy. They target mainly the children, hence, adult people eventually their target guests. In addition, Disney also targets teens and the target market strategy has been helping them to get new guests.

However, it has risks involved with this as another Asian hospitality business can imitate the ideas, therefore, it will not have value in uniqueness. In addition, in differentiation strategy, Jeju Shinhwa World has to keep premium pricing and most of the guests cannot afford this. They have to do market research before taking differentiation strategy as changing customers' need can impact on the business. This overall project is expensive and the resort is targeting majorly rich section, therefore, the target market of the organisation is limited.

Corporate social responsibility strategy

Jeju Shinhwa World works closely with the local community and this resort wants to make a long-term partnership to achieve the sustainable development of conservation and improvement. The management of Jeju Shinhwa World has already conserved 300 trees and these are ready to transplant to various sections like a theme park, villas and Water Park. Jeju Shinhwa World accompanied school children to plant new Oak trees to enhance the ecological balance of the resort. Coral Berry is a native plant in Jeju that symbolises marks and prosperity, the management planted this tree in the beginning of the journey. It has been noted that 55% of consumers are willing to pay more for the services from socially responsible companies (Griggs et al. 2013). Management of the resort provides philanthropic motivation to the employees who can engage themselves with local communities. CSR activities of Jeju Shinhwa World can improve public image and increase media coverage as having strong CSR activities can increase the opportunity to get media coverage. CSR can attract and retain the investors to take care of social responsibilities. Jeju Shinhwa World considers people's engagement as employees play important role in this resort and the variables are education, social resources, equity, health and well-being of the employees. In addition, this resort needs to consider profit as they make the budget, profit and loss statement, cash-flow, sustainable finance and personal incomes (Holden et al. 2017). Lastly, the planet is about environmental factors like natural resources, water and air quality, energy conservation and land use.

CSR can negatively impact on the operation process as one error in the step can impact on reputation, legal, financial issue, opportunity cost and operational process of the organisation. CSR strategies of this resort can provide sustainable development for the organisation, on the other side; CSR can make a balance between risk management and rewards. 

 

Recommendation and justification of the best strategic option

Jeju Shinhwa World needs to take the differentiation strategy in order to offer different services from other resorts and theme parks. In order to create differentiation strategy, Jeju Shihwa can ensure premium pricing to cover the costs through focusing different attributes. It is needed to ensure that the attributes of Jeju Shinhwa World must be valued; otherwise, it may end up with below average returns. The political condition of Korea is not stable; this could impact on the current tourism industry. The economic condition of Asian countries is getting strong as it sees strong growth momentum to next few years and it will be beneficial for the resort. Social-cultural preferences of the resort have been changing as people are likely to spend money on leisure. Through differentiation strategy, Jeju Shinhwa World needs to decide certain attributes to focus on different services. The resort makes the services with premium pricing and this will help the resort to differentiate the services, unlike other resorts. The theme park, water park, villas, amenities, world-class services in fine dining and outdoor cinema halls will allow multiple services to co-exist to concentrate different attributes. Jeju Shinhwa World needs to make the services available to the guests and this brand must be readily available for the guests to gain the competitive advantage. Differentiation of services can help this resort to attract more guests and it will eventually enhance the customer base.

Jeju Shinhwa World will take initiative to reduce the carbon footprint in future in order to develop sustainable tourism. Jeju Shinhwa has a partnership with United Nations Institute for Training and Research (UNITAR) to measure and reduce carbon footprint in Jeju Island. Jeju Shinhwa World will conduct an audit of its own carbon footprint and it will try to be more energy saving.

Jeju Shinhwa World will try to work with the aviation industry to work actively to improve fuel efficiency. In addition, in terms of tourism planning and car travelling, Jeju Shinhwa can work together to promote more environmentally friendly transport in Jeu Island. This theme park can launch responsible visitor communication campaign in order to inform the visitors and operators about their impact on the environment. 10 years from hence, responsible travelling and green accreditation accommodating will be part of sustainable tourism. Marketing initiative of Jeju Shinhwa World will assist tourism business to support research about changing tourists’ behaviour related to environmental issues.

Commercial sustainability is associated with minimising waste, reducing energy consumption and conserving water. Jeju Shinhwa World will take the sustainable changes in Theme park and Resorts, like high-efficiency lights, green construction and sustainable design in accommodation.

Conclusion

It has been observed that Jeju Shinhwa World is a newly launched resort and theme park where guests can enjoy leisure. This resort is located on Jeju Island, Korea and it is offering various services like Water Park, theme park, film centre, villas and world-class interior. Human resources and assets of the organisation provide help to flourish this resort to gain competitive advantage. In addition, this hospitality organisation takes two strategies, CSR and differentiation. Differentiation strategy can be recommended to Jeju Shinhwa World to take as a sustainable strategy. Creating differentiation strategy on services to attract the guests can help the resort to gain a competitive advantage as in Asia; there are no such resorts available for the guests. Jeju Shinhwa World makes reliable partners and differentiation strategy is associated with intangible assets like dedication, human touch and knowledge to gain competitive advantage.

 

Reference List

Ali, F., Hussain, K. and Raghavan, N.A., 2014. Memorable customer experience: examining the effects of customers experience on memories and loyalty in Malaysian resort hotels. Procedia-Social and Behavioral Sciences, 144, pp.273-279.

Ang, A., 2014. Asset management: A systematic approach to factor investing. Oxford University Press.

Barin Cruz, L., Boehm, D.M. and Ogasawara, M.H., 2015. CSR-based differentiation strategy of export firms from developing countries: An exploratory study of the strategy tripod. Business & Society, 54(6), pp.723-762.

Barkemeyer, R., Holt, D., Preuss, L. and Tsang, S., 2014. What happened to the ‘development’in sustainable development? Business guidelines two decades after Brundtland. sustainable development, 22(1), pp.15-32.

Bocken, N., Short, S., Rana, P. and Evans, S., 2013. A value mapping tool for sustainable business modelling. Corporate Governance, 13(5), pp.482-497.

Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner Production, 45, pp.9-19.

Campbell, J.D., Jardine, A.K. and McGlynn, J. eds., 2016. Asset management excellence: optimizing equipment life-cycle decisions. Florida: CRC Press.

Disneyland Resort. 2018. Discover Value in Vacation Packages. Available at: https://disneyland.disney.go.com/vacation-packages/ [Accessed 2 Jan. 2018].

Eturbonews.com  2017. Statistics Korea: Resort island of Jeju is booming - eTurboNews (eTN). eTurboNews (eTN). Available at: https://www.eturbonews.com/136313/statistics-korea-resort-island-jeju-booming [Accessed on 28 Dec. 2017].

Floh, A., Zauner, A., Koller, M. and Rusch, T., 2014. Customer segmentation using unobserved heterogeneity in the perceived-value–loyalty–intentions link. Journal of Business Research, 67(5), pp.974-982.

Ghosal, V., 2017. Business strategy and firm reorganization: the role of changing environmental standards, sustainable business initiatives and global market conditions. Business Strategy and the Environment, 24(2), pp.123-144.

Griggs, D., Stafford-Smith, M., Gaffney, O., Rockström, J., Öhman, M.C., Shyamsundar, P., Steffen, W., Glaser, G., Kanie, N. and Noble, I., 2013. Policy: Sustainable development goals for people and planet. Nature, 495(7441), pp.305-307.

Hamka, F., Bouwman, H., De Reuver, M. and Kroesen, M., 2014. Mobile customer segmentation based on smartphone measurement. Telematics and Informatics, 31(2), pp.220-227.

Holden, E., Linnerud, K. and Banister, D., 2017. The imperatives of sustainable development. Sustainable Development, 25(3), pp.213-226.

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Larson, A., 2017. Method: Entrepreneurial Innovation, Health, Environment, and Sustainable Business Design. Darden Business Publishing Cases, pp.1-7.

Ortiz?de?Mandojana, N. and Bansal, P., 2016. The long?term benefits of organizational resilience through sustainable business practices. Strategic Management Journal, 37(8), pp.1615-1631.

Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The quest for competitive advantage. New York: McGraw-Hill Education.

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Tabi, A., Hille, S.L. and Wüstenhagen, R., 2014. What makes people seal the green power deal?—Customer segmentation based on a choice experiment in Germany. Ecological Economics, 107, pp.206-215.

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