A. Indianapolis lodging industry environment evaluation
Indiana, known worldwide as the racing capital of the world also bears the nickname Crossroads of America, which was adopted as the state motto March 2, 1937 (This is Indiana, 2009). These nicknames suggest numerous visitors travel the globe to experience Indiana’s finest attractions for business or pleasure and need suitable accommodations during their stay. Indianapolis is a large metropolitan area that offers a multitude of sporting events, conventions and large attractions. Big cities offer big attractions; however, sometimes individuals just want to relax and enjoy their surroundings without all of the noise and hustle that big venues offer. Indianapolis has the perfect place for everyone to enjoy during their visit. The scope of this paper will concentrate on the niche market of Bed and Breakfast Inns. A1. One dominant economic feature of lodging industry
Bed and breakfast inns cater to a different market than do hotels, motels or vacation rentals. These extraordinary business owners offer their clients an enchanted escape from the everyday hustle of life (How to start a bed and breakfast, n.d.). Differentiation is the main dominant economic feature of Bed and breakfast inns. Their owners know from the moment of conception that their business must offer their clientele something that their inner soul longs for and is difficult to find. Only by fulfilling that longing can a bed and breakfast inn survive as well as become prosperous. Failure to offer clients that extra special feeling of satisfaction is sure demise for the business. Bed and Breakfast customers are expecting a warm atmosphere which caters to their needs and are willing to pay more for those services. A2. Impact on industry profitability of force driving change The United States as well as the city of Indianapolis’ economic problems that began when the GPI fell in 2004 (Soloman, 2015).
As people lost their good paying jobs and exhausted their unemployment benefits many began to explore ways to supplement or replace their income. Some people with large homes and extra rooms that they could no longer afford to support decided to try their entrepreneurial skills by opening a bed and breakfast type inn. Bed and breakfast inns hold extraordinary expectancies for owners as well as customers. Owners of these establishments invest time, money and talent into creating an atmosphere of a storybook setting to please their guests. The tasks are much more difficult than one may think in the beginning. Owners must determine if the property is properly zoned for such an establishment and once approved owners are faced with the challenge of furnishing their hide-a-ways as well as purchasing the finest linens to encompass their extraordinary clientele.
Their humble abodes must then pass inspection by the health department and then the overwhelming task of getting their establishment’s availability in front of the public. Indianapolis’ lodging industry is robust and growing rapidly to meet the ever growing demand that the city works feverishly to attain. Indianapolis (and its surrounding suburbs) currently host one hundred eighty-three hotel/motels, twenty-one bed and breakfast inns, five specialty venues and thirty-two vacation rentals (TripAdvisor, 2015). Competitors, large and small, are represented in these numbers. The Indiana lodging industry provides 21,849 jobs that earn $470,000,000 of income (Indiana lodging economic overview 2014, Indiana Restaurant and Lodging Association, 2014). This industry contributes to Indiana’s economic well-being as it offers a little more than four percent of the Indiana employment opportunities and earns the state $641,000,000 in tax revenues on a $2.7 billion industry (Indiana lodging economic overview 2014 in RLA, 2014).
A2a. Strategic plan to accommodate change driving force
Enchanted Bed & Breakfast owners were fortunate to find a lovely 1906 mansion built in the heart of Speedway, Indiana. Even though the town has its own name and small government center it is considered by most Hoosiers a part of Indianapolis. The location is perfect to attract race fans from the world over for the many major racing events that are held at the famous Indianapolis Motor Speed. Enchanted Bed & Breakfast is located just a few blocks from the race track and museum. Located just eight miles from the heart of downtown Indianapolis, Enchanted Bed & Breakfast provides patrons the opportunity to explore Indy’s cultural attractions or experience major sporting events and then return to a welcome, relaxing atmosphere to savor their enchanted evenings. Too ensure that Enchanted Bed & Breakfast realizes the best return on investment our guests must treasure the memories of their stay and happily share those feelings with their friends, coworkers and social media networks.
Enchanted Bed & Breakfast must provide stimulation to all of the five senses: sight, touch, smell, sound and taste, an accidental occurrence of yesterday will now become deliberate happenings in our new strategic plan. Stimulation of the senses will be occurring every moment of the day in one form or another. The first to be awakened is the sense of sight as guest pull into the drive and take in the beauty of the lovely manicured gardens, flowers and herbs while others remain to be awakened upon the entry of the inn. The sense of sight continues to experience new visions as they enter the inn that tell their minds (and hearts) how charming they find their new home away from home. Their sense of smell is tantalized by the aroma of fresh, buttermilk biscuits and heavenly pastries baking throughout the day, succulent home cooked meals simmering on the stovetop, and fresh cinnamon sticks wrapped in lavender nestled in the guestrooms. These delightful scents ensure that visitors remember the inn each time they encounter any of the mystical aromas enjoyed during their stay.
Their sense of taste will be subject to slight glimpses of captivating flavor throughout the day. Warm weather will be perfect for home baked cookies and freshly squeezed lemonade while cold weather will best be tamed with hot cocoa topped with marshmallows and gooey fresh baked brownies. Tasty home cooked meals will be offered throughout the day so guest don’t have to worry about shopping for or traveling to another location for dining. The food will bewitchingly remind them of grandma’s house and those happy childhood memories will now be shared with the inn causing them to want to return. The fourth sense to be stimulated is touch. Stylishly decorated, clean and spacious rooms adorned with comfortable and stately furniture offer guest the opportunity to relax in the quiet of their room or enjoy the company of other travelers. Elegant linens await guests as they snuggle into bed with high quality mattresses and feather pillows. Luxurious baths will soak away the cares of the day and prepare them for the day ahead. The fifth sense to be aroused is that of sound.
Wind chimes quietly ringing in the gardens, birds singing their lovely tunes and water falling from the fountains are enough to calm the weary nerves of those that have traveled from far or near. As guest unwind on the comfy swing under the large shade tree with the warm summer breeze caressing their skin listening to the quiet of enchanted gardens they are carried to a carefree time and feel totally relaxed and worry free. Our new strategic plan incorporates maximizing the benefits of Enchanted Bed & Breakfast’s prime location and the need to satisfy the desires of our customer’s five senses. Advertising Enchanted Bed & Breakfast on major Internet sites for racing and sporting events as well as major sites acting as online travel agents will ensure that new clientele become aware of the inn’s availability and remarkable location creating the initial desire to visit the inn. A magical desire to return to the charm of Enchanted Bed & Breakfast is created during a guest’s first visit by involving all five senses to create a treasured memory.
This memory combined with the perfect location provides visitors of Enchanted Bed & Breakfast with a sweet sense of a new found home away from home. Each visitor will associate their stay with a different memory and those memories will urge them to return time and time again. A3. Two significant differentiating competitive characteristics of industry Large chain hotels offer a wide variety of amenities including a business center, pool and gym among the most popular, but these conveniences also offer less privacy, noise and often the hidden cost of paid parking. In a sense a guest pays for their vehicle to have overnight lodging as well. For those that are searching for solitude, serenity or romance, bed and breakfast inns offer just the ambiance. The picturesque atmosphere lures weary travelers to experience the calm and rejuvenate after a vigorous day of play or a draining day of business meetings.
Couples often seek the allure of a bed and breakfast to get away from work and family obligations as they explore visions of a simpler, stress free era of yesterday or rekindle their romance. Exercise rooms are swapped for “countryside walks” along rose lined paths, filled with the smells of roses, honeysuckle, and lavender under trees of grandeur. Soda machines in the hallways are replaced with fresh, ice-cold lemonade and the aroma of warm, just baked cookies on the veranda. When ready to turn in for the evening guests find their beds turned down and a delicious chocolate treat awaiting them. Guests quickly drift off to sleep and rest peacefully without the sounds of carts being pushed down the hall. Visitors arise in the morning to the aroma of just brewed coffee, bacon and eggs sizzling on the stove and the smell of homemade buttermilk biscuits wafting down the corridors inviting them to the kitchen instead of rushing to the lobby to grab a glass of orange juice or cup of coffee from a machine to wash down their pastry.
Service, atmosphere and dining opportunities are amenities that differentiate Bed and Breakfast Inns from all other lodging properties. All of these specialty amenities are included in the price of the accommodations unlike hotel/motel chains or vacation rentals. While some hotels offer a breakfast consisting of pastries, coffee, juice and possibly some warm fares, they do not offer home cooked hot meals. The housekeeping staff of the larger venues never turn down your bed, nor do they offer you very warm welcome as you arrive. A3a. Strategic group map placement
Lodging Strategic Map
Enchanted Bed and Breakfast has a vast amount of competition; however, there remains plenty of room for new growth in the industry. One just has to find an existing market share that no one else has garnered and cater to the clientele of that market share. Enchanted Bed and Breakfast has done just that by researching their competition and mapping the market’s strategic groups. The inn was squeezed in with its large competitors causing it to be overlooked and passed over for easily recognized lodging chains. It was evident if Enchanted wanted to stay in business as well as be profitable that changes were needed.
Enchanted would have to move away from the “pack” so to speak and be recognized for something that only the staff could offer, beds are just the tool by which one sleeps, but a relaxing, inviting experience speaks to our hearts, souls and minds. Enchanted had to reach to a different level and the only real difference between their beds and those offered by their competition was the service that came along with them. In this hurry up, get it done and work longer hours world in which we live today our minds and bodies long for the days of yesteryear when they could relax and enjoy life’s treasures just a bit. Yesterday that relaxation was a fore gone conclusion of the way the week would begin, merchants closed their shops and people relaxed a bit during the day while enjoying family and friends. Neighbors knew their neighbors and enjoyed talking to one another. If Enchanted Bed and Breakfast could give people that “time of rest and relaxation” back even for a day or two, they could corner a niche market! That is what they are now working to achieve. They offer superior services that their competition cannot offer due to their size and often their location.
The costs per night are comparable between the bigger chains and Enchanted, but the benefits differ greatly. Enchanted offers no pool, but they do offer a room with a Jacuzzi. Delicious home cooked meals, snacks, lemonade, tea and coffee are included in the prices of the rooms; however, just like home the selection is limited to what the cook prepares for the day. Warm baked goods are served throughout the day as are lemonade, tea and (upon request after breakfast) fresh coffee. Parking is free and Enchanted has partnered with a local taxi service to provide transportation downtown at a discounted rate as well as a local rent-a-car vendor, also at reduced rates for customer’s benefit. The inn keep has also offered clients pickup and return to the airport on several occasions. These personalized services set Enchanted Bed and Breakfast above their competition as they cater to those that want the welcome home feeling as they travel. A4. Two key factors to Enchanted Bed and Breakfast’s success. (1)
The management of Enchanted Bed and Breakfast understand their market segment. During the major races they will host clientele that have a larger discretionary income and are likely in their thirties or higher age bracket. They are more likely to travel as couples, often two couples will travel together and sometimes they will travel with groups of friends or family. These travelers have the means to stay in a luxury hotel with full amenities so it is critical to cater to their desire as well as their needs. Their expectations will be higher than a younger clienteles expectations in most cases; however, they will also be looking at comfort and convenience.
By providing friends and family common space to enjoy time visiting and meals that bring everyone together Enchanted Bed and Breakfast offers their clients the opportunity to create special memories they could not experience anywhere else but home. The best part is Mom gets to join in the festivities rather than working all day and evening in the kitchen. Time with Mom – priceless! The best times and memories are often centered around the dinner table or under a shade tree playing games, these benefits can only be offered by Enchanted Bed and Breakfast, because when large groups, friends or family, special events are planned to lead to those special celebrations that will become their treasured memories.
Our premier location offers a major advantage for Enchanted Bed and Breakfast. Being located within walking distance to the Indianapolis Motor Speedway offers our guest the ability to escape fighting the traffic and sitting in long lines trying to find parking that is affordable as well as near the entrance. Even those with the means to pay higher prices to park nearby would prefer not to be exploited in doing so. Parking close to the track will cost $50 to $150 and in most cases one will still have to walk about a mile to the gates, for many that will be through a Table 1(Indianapolis Hotels, 2015)
Local attractions nearby
Indianapolis Motor Speedway
Hall of Fame Museum
Lucas Oil Stadium – Indianapolis Colts
Lucas Oil Raceway
Indianapolis Raceway Park
Indianapolis Art Museum
White River State Park
National Art Museum of Sport
Crown Hill Cemetery
NCAA Hall of Champions
Eiteljorg Museum of Art
Indiana Historical Society
Indianapolis International Airport (IND)
Eagle Creek Park
Indiana Convention Center
Indiana Roof Ballroom
Capital Conference Center
Children’s Museum of Indianapolis
Medal of Honor Memorial
Colonel Eli Lilly Civil War Museum
Indiana War Memorial
The Children’s Museum
field although well kept, not the same as walking on a sidewalk. Enchanted Bed and Breakfast is the closest lodging establishment to the track at just 1.3 miles, but much of the walk is through the heart of the beautiful, tranquil, residential area. The last few blocks are lined with racing vendors that allow guests to collect their souvenirs as they walk to and from their interest as well as enjoy the festivities of such a main attraction.
Other venues are close at hand as well shown in the figure below and their distance from the inn. These venues are attractive to sports fans as well as history buffs, but the attractions also include the Indianapolis Zoo and the Children’s Museum (Indianapolis Hotels. 2015). There are several modes of transportation one can utilize to reach their destination, walking, bicycle, taxi, rental car and public transportation. Indianapolis is bicycle friendly. Travelers that want to bike around, but didn’t bring their bike can purchase a twenty-four pass from Pacers Bikeshare. The pass allows the holder to unlimited thirty minute interval trips for $8 (Pacers Bikeshare). Once you reach your destination at a local attractions, just dock it for safe keeping and you don’t have to worry about it, when you are ready, use another to reach your next destination. Additional time is also available when needed, the first addition thirty minute period is $2 and each thirty minute period after that is $4; however, as long as you dock and switch every thirty minutes the fee is included in the $8 charge (Pacers Bikeshare).
Enchanted is also the perfect place for a wedding party to hold their pre-wedding events. Participants can enjoy the rehearsal, then return to the inn for their rehearsal dinner. We offer several different packages for weddings (easily converted for graduation parties, renewing of vows, award ceremonies and so forth) that include total inn rental for the entire weekend. The inn provides personalized catering for up to one hundred forty people for our highest package. These personal services provide the happy couple time to enjoy their guests, relax and relish their experience while making memories for a lifetime. Guests visiting Enchanted Bed and Breakfast will be given a folder containing information about the local attractions and transportation options. Advertising will focus on groups with larger discretionary income by targeting fans of the Indianapolis Motor Speedway and our Indianapolis Colts. We will also continue to use hotel booking sites such as Expedia, Hotels.com, etc. which enables lodging seekers world-wide to find our inn. We will also target venues that target brides and weddings. Enchanted Bed and Breakfast offers a reward program for returning guests that gives them a free night stay after their tenth night. A5. Competitive Forces
It is critical to determine where the power exists in the lodging industry. To determine where the power lies Porter’s Five Forces will be used to analyze the market (Mind Tools, n.d). The first of the five forces is competitive rivalry. Enchanted Bed and Breakfast has created a niche market by catering to those with higher discretionary income and providing superior services that others have a difficult time matching. Furthermore, the inn offers those planning larger events such as weddings, graduation parties, and business meeting the convenience of a versatile site that can quickly change the setups of any meeting area of the inn to accommodate their needs and desires. The major advantage that the inn has is its location. The inn is located very close to the Indianapolis Motor Speedway and near downtown, but offers its guest a serene environment and free off-street parking in a low crime area. The power of competitive forces lies with Enchanted and will continue to do so as long as we can provide outstanding customer satisfaction and value.
The second of Porter’s Five Forces is buyer bargaining power, which indicates a limited customer base enables customers more control over our prices; however, the location of Enchanted Bed and Breakfast provides the opportunity to resell the rooms easily during peak times by posting the availability or calling a customers that have left their information in hopes that the inn would have an opening. During the times between major events in the city the ability to resell the rooms is not as easy. While the city often hosts major events there are often times when things are much slower, those times can be a challenge, but that is also an opportunity to offer a special deal to local business to host their meetings. The power of buyer bargaining power is flexible and the favor changes depending upon the happenings in the city.
Supplier bargaining power is the third of Porter’s Five Forces. Due to the large number of vendors in Indianapolis it is incredibly easy to replace vendors. The same challenge faces them with customer buying power and that must be used as a bargaining tool when offering a vendor a contract. By entering into a contract with a vendor for a long term agreement Enchanted Bed and Breakfast retains the power of bargaining.
The fourth of Porter’s Five Forces is the substitution of your product. While it would be fairly easy to find another abode in which to sleep, but the personalized service would be difficult to reproduce. It is true that other bed and breakfast inns offer special services and breakfast in the morning, but few offer breakfast and dinner as well as freshly baked pastries though out the day. The inn keepers at Enchanted Bed and Breakfast treat each of their guests as if they are family and are child friendly. We offer a special family quarters on the third floor that is very spacious and is perfect for a family with children of any age including teens. We also have a portable crib should any of our guests need one. Few bed and breakfast offer a honeymoon suite with a private entrance and service a special brunch for the newlyweds and their guests including those that are not residing at the inn as part of their wedding package. Enchanted Bed and Breakfast’s total experience would be nearly impossible to substitute.
The fifth and final challenge of Porter’s Five Forces explores the ease of entering the bed and breakfast market for new competition. To open a bed and breakfast inn one must obtain a property suitable for lodging that is usually a large historical home, obtain a license, have the property zoned properly for the business and for parking, purchase new furnishings for the property including new good quality beds, new linens, dishes and decorations. Going before the zoning commission will probably be one of the more difficult challenges as one must prove how the business will impact the neighborhood, that ample off street parking is available for guest as well as the owners and how the business will operate (How to start, n.d). Signage will also be an issue that will require a plan that one will have to defend and get approved. After receiving the city’s approval to open the business it will be necessary to find suppliers and hire employees.
It is not realistic to believe that one person can do all of the tasks that are required when guests are staying at the inn and still have time to deal with the guests (How to start, n.d). The inn keeper will also need to determine how they will keep their records, file their taxes and pay their taxes. There is a tremendous amount of work to do before one can open a bed and breakfast, but it is feasible to do so. It will take time, planning and a great property to actually see the vision come to fruition. Enchanted Bed and Breakfast is positioned well to manage any challenges from competitors. The inn caters to specific niche market, offers a few extravagant features, an elegant ambience and extraordinary service. These combined strengths provide the inn with the ability to withstand the challenge of competition.
B. Enchanted Bed and Breakfast strategic plan
The strategic plan consists of Enchanted Bed and Breakfast remains customer centered. Providing the ultimate in customer experience is always at the forefront of our services; customer satisfaction is key to our success. B1. Enchanted Bed and Breakfast’s vision statement
Our guest will remember their stay as a fantasy escape from the fast paced world in which we live where service and attention to detail are beyond their expectations. B2. Mission Statement
Enchanted Bed and Breakfast guests can expect to be treated as family members that have returned from a long journey whether visiting for business, pleasure or the celebration of a special occasion. Business visitors will discover a distraction free solace from where they can forge new strategies or provide team mates with additional training and professional development. Pleasure guests will find a magical, serene haven in which to relax, recharge and create delightful memories.
Large groups celebrating special occasions will find a fantasy filled oasis where they are treated like royalty from the moment they arrive to the moment they drive away filling their hearts with treasured memories. These memories will be so delightful that all of our guest will have a desire to return to their magical get-a-way. Our mission is to create blissful memories for our guests that will ensure they have a desire to return year after year as well as share with family, friends and associates. While creating enchanted illusions of a tantalizing sanctuary that will become a home away from home, Enchanted’s staff will ensure that our service is beyond compare.
B3. Competency to distinguish from competitors
The owners of Enchanted Bed and Breakfast have a unique ability to charm their guests immediately upon arrival. Guests feel comfortable and welcome which allows them to be relaxed and enjoy their stay. They have the amazing gift to create a cozy relationship with their guests and enjoy their conversation, but seem to know the perfect time to leave their guests to enjoy the atmosphere and enjoy their privacy. The comfortable conversations provide guests ample time to ask questions about the history of the inn as well as the area and learn of local attractions that they should explore during their stay.
They have created booklets of local attractions that have been categorized by type which includes maps from the inn and pricing information. Our guests are always delighted to explore the area and plan their days while sitting by the cozy fire in the early evening sipping their beverage of choice and enjoying fresh baked treats. It is true that creating these treasures add to the overhead of the inn; however, these treasures set Enchanted Bed and Breakfast apart from our competition. Chapter 4 Executing strategies
B4. An example of capitalizing on market opportunity
The market opportunity of a bed and breakfast inn is service that is extraordinary in every way providing guests of the inn a memorable experience that they could not find elsewhere. Customers of a bed and breakfast want an atmosphere that is personal, enchanting and relaxing. They could easily stay in a luxury hotel and sleep in a good bed, but once they finish at the front desk they seldom have interaction with any of the staff unless they have a problem. Bed and breakfast guests expect more and are willing to pay the extra money to have it. Examples of how Enchanted Bed and Breakfast can capitalize on the customer’s desires, willingness and ability to pay are outlined throughout this paper. It would be redundant to provide them again here, but it is important to note that we will exceed our guest’s expectations in service, cleanliness and attention to detail. B5. Analyze one external threat
There are a few other bed and breakfast in the Indianapolis area. The larger facilities are located downtown, but are closer to high crime areas and lack the ability to provide their guests with free off street parking. There is only one other bed and breakfast on the west side of Indianapolis and it is four and one half miles away from the motor speedway. B5a. Recommended actions to address the threat
Renata’s B&B is much smaller and lacks the large spaces needed to host big groups. Enchanted Bed and Breakfast is in the process of adding a larger structure that will afford the inn the ability to host larger parties or host multiple large parties concurrently. By adding this space to our existing capacity we are positioning Enchanted Bed and Breakfast to be the largest lodging facility that offers personalized service in a home like atmosphere. B6. Propose one business-level financial objective
Enchanted Bed and Breakfast will increase sales over the next year by 12%. We will accomplish this utilizing our revised advertising strategy. 1. Direct advertising through local sports venues to their customers. This direct marketing method ensures that Enchanted Bed and Breakfast obtains information on the new contacts and can provide specialized promotion material based upon their individual needs. 2. Developing an affiliation with AARP that offers their members a small discount for their direct booking; however, the guest must provide proof of membership at check-in. 3. Offer a membership card to be validated after each night’s stay that provides the member with a ten percent discount on the first night of their eleventh visit. Tracking the results would be multi-faceted. Members’ visits would be recorded in our database along with information about their stay, number in party, special dietary restrictions, reason for stay, etc. and this information would assist the inn with future promotional materials. Birthdays and anniversaries would also be included in the database and cards would be mailed to our members on a monthly basis.
The utilization of financial ratios will allow us to determine the stability and financial health of the inn at all times. We track our profitability ratios which include gross profit margin, a formula that indicates the profit after the bills for producing the product have been paid or how much money the inn is actually profiting. Another profitability ratio in our arsenal is the return on sales ratio, the after tax profit divided by the revenue, shows the real profit of the inn. We will utilize a wealth of financial ratios including those that show us the inn’s liquidity, working capital and current ratio, but those don’t paint a true picture unless the business is aware of its debt to assets ratio and price earnings ratio just to name a few. Enchanted will analyze its financial health constantly, because should a problem arise the company must find it quickly or it may mean the death of the inn. B7. Propose one functional-level strategic objective that fits your company and situation. Enchanted Bed and Breakfast realizes that each event booked demands a special “effect” form our service.
When a customer plans a wedding they want service that will make their event seem magical and Enchanted Bed and Breakfast is the perfect place to create an enchanted event for a princess and her prince. The setting must be picturesque with perfect lighting, sound and aroma to set the ambiance if the inn is truly going to be different than its competition (Bass, 2015). Currently the inn can host sixty guests and the wedding party guest (up to fourteen) for an event, which limits the inn’s growth opportunities. Enchanted Bed and Breakfast proposed plans to build an outdoor pavilion that will host one-hundred forty guests. This additional space will have modern restroom facilities and a kitchen. The new facility will be connected to the gazebo through the courtyard and patio. All of the spaces will be available to rent for large parties. Various options have also been presented as wedding packages that will increase growth of the inn by fifty percent, which allows Enchanted Bed and Breakfast to offer daily facility rentals as well as the over-night lodging.
These types of events would also require another service to be provided, catering of the events would become a large part of the experience. Most establishments insist on a preferred caterer for events held on their property, but at Enchanted Bed and Breakfast the happy couple are free to select the caterer of their choice. However, we have a partnership with Zach’s Catering that offers our guests a ten percent discount to our customers. His attention to detail and delicious wares ensure that Enchanted Bed and Breakfast’s guests will be happy with his services when used. The inn also provides some catering; however, the inn has determined it will reduce the amount of food cost seven percent by reducing the amount of wasted food. Meals that are catered by the inn will buffet style meals from a specified selection. While some may take more than they will actually eat, most often will take only what they want, thus reducing waste from pre-plated foods. Enchanted will track the success of this functional-level strategic objective using financial ratios.
The gross profit margin will tell the managers the amount of profit the inn is producing and will be used heavily to measure all aspects of the business. One of the more critical measures will be the return on invested capital ratio. This ratio also shows the profitability of the inn, but it also will tell management how well they are investing the inn’s capital. If they have made good decisions these numbers should produce much higher numbers each year, but especially in the first year. The inn must constantly monitor the working capital (the amount of money available to pay current liabilities if the inn quickly converted it assets to cash) as well as its current ratio, which indicates the current assets divided by the current liabilities. It is critical that the current ratio is higher than one, should it fall under one it would indicate the inn’s success was questionable at best. C. Execution of strategic plan
The steps required to execute of our strategic plan will be based upon ten basic managerial tasks of strategy execution (Thompson, Strickland, & Gamble, 2012, page 331). The first task is staffing the organization and a requirement for employment at Enchanted Bed and Breakfast is to be enthusiastic about one’s work regardless of the position held. Those working for a third party vendor such as the catering company are bound by the same standards as our employees per our vendor contract. Employees are expected to be smiling, welcoming faces, even on the phone, when dealing with our customers. Our customers are anyone that comes in contact with the business or our customers. Happy customers equal sells or in our case room rentals, which in turn leads to revenue that provides Enchanted Bed and Breakfast with a profit. Unhappy customers can destroy profitability and could put the business at risk of failure.
Task two is to ensure that training is ongoing for our staff. We will continue to utilize the tools available to inn keepers from Indiana Bed and Breakfast Association including the mentoring program as well as the recipe sharing. Additionally, Enchanted Bed and Breakfast will utilize the best software available to record financials, maintain records and manage the inn. Those that will be required to utilize the software will receive training to ensure that the investment is used to its fullest. Professional memberships are another avenue that offers our management different resources including training and support. Among those professional memberships is the American Hotel & Lodging Association which offers training, education and certification training to lodging professionals (AHLA, 2013).
The third task is to develop an organization that is supportive of our strategy. We are doing this by hiring the best employees possible, providing continuous training and setting an example in our leadership styles. As employees see how we interact with our customers they will learn what is expected, but more they will learn that our guests are not our only customers, but that we have internal customers as well in them and our vendors. Employees of Enchanted will also be empowered to make some decisions to accommodate our guest’s requests. They will not have to come to management for every detail; however, the staff is small and most often management will be present to deal with issues that arise. Empowered employees have a deeper connection with the business and are more likely to strive to provide guests with the best experience possible.
Many of the tasks tie together with task three in creating the atmosphere for success. Our management team must be effective in communicating their beliefs, desires and objectives. It is not enough to create a strategy; management must present it to employees in such a manner that they buy into the same vision. Employees must be rewarded for ensuring that the inn makes its strategic and financial goals. This ensures that managements goals will be the shared by the employees and that the team will work together to meet their shared vison. By creating a policies and procedures manual that outlines our best practices everyone will operate from a central point of reference. Together our team will work to ensure that Enchanted Bed and Breakfast continues to be the best bed and breakfast in Indiana. By creating an environment in which we are proud we will prevent our competition from becoming a threat.
Finally, Enchanted will allocate abundant resources to ensure that our employees have all the tools necessary to perform their job at the highest level possible. Only when they have superior tools can they execute superior customer satisfaction. Our staff will utilize technology to their advantage, but will provide this service for our guests as well. Today’s client demands high-speed Internet and reliable systems. They also want to be sure that their information is safeguarded when registering to stay at the inn, making payment to the inn or accessing the outside world from our intranet. C2. Illustrate the actions you would take to closely align the entire company’s efforts to the company’s mission.
Enchanted Bed and Breakfast will offer employees the opportunity to provide suggestions for improvement at any time and will be open to a discussion about the suggestions. Employees of the inn must feel as if they have a say in the day to day running of the inn if management wants them to be fully invested into the mission of the establishment. Feedback to our employees will be available upon request at any time throughout the year; however, twice a year management will meet with employees individually to discuss goals and performance.
The size of our organization allows management to work closely with employees, but it also offers employees a autonomy. Everyone understands the tasks that must be performed daily and the importance of each task; therefore, each employee has some control over their daily schedule. It is understood that breakfast must be prepared early, beds must be made and cleaning must be accomplished each day, but other tasks that need to be addressed can be scheduled during the day according to the reservations of the inn. Each morning the staff meets in the kitchen for coffee and discusses the events planned for that day as well as the next to ensure that there are no surprises due to any large preparations. Larger events take additional time in preparation; team members are encouraged to take responsibility for any part of the arrangements for an event based upon their talents. One person is never “stuck” doing the same routine day after day other than a few specific chores for which they were specifically hired.
Performance management is an endless sequence of performance review and feedback that requires employees and management to discuss goals, the pathway to achieving those goals, mentoring employees and rewarding success. It is important that management work with employees to set goals that are specific in nature, measureable, attainable, results oriented and bound by time constraints (Kreitner, 2010, page 268). Collectively these goals are called SMART goals (see each underlined letter in the previous sentence. However, it is equally important that the management of Enchanted promote the employees commitment to their goals as well as support them in their endeavors. It is not enough to only tell one’s employees to set goals, but more so to enable them to succeed. This promotes a sense of satisfaction among employees and that will also mean commitment to Enchanted Bed and Breakfast. C3. Two theories of motivation
The mission of Enchanted Bed and Breakfast is centered on the satisfaction of our customers. Management employ the ideas of Vroom’s Expectancy Theory, which states that the effort put into the task determines the outcome of the task (Kreitner, 2010, page 223). If the workforce of Enchanted expects excellence as an outcome, then excellence must also be the amount of effort put into providing superior lodging with superior service. Enchanted employs the best in each field, offers compensation that is comparable to the expertise of their employees, provides continuous training as needed and values each employee. Only when the work force works together cohesively can management expect to achieve the desired results that will ensure they meet their mission. Vroom’s theory has three major components, expectancy, instrumentality and valance (Kreitner, 2010, page 223).
The concepts basically indicate that the employee’s internal need for excellence drives them to be the best they can possibly be, which causes them to exceed management’s expectations of the effort needed to be successful. Their combined performance provides the outcome of excellent service and provides guests with a stay that exceeds their expectations. Together the workforce creates Enchanted Bed and Breakfast’s reputation of superior service, Management creates an atmosphere that promotes employee satisfaction by embracing job enrichment, which allows employees to experience a vertical loading of tasks (Kreitner, 2010, page 233). Providing employees the ability to perform various levels of tasks prepares employees to meet the challenges that they may encounter when dealing with customer wishes and engagements.
The extrinsic rewards offered by Enchanted Bed and Breakfast will be the quality merchandise that are furnished with which they will perform their duties, fair pay and benefits as well as recognition for extraordinary measures in keeping with the Expectancy Theory. When the inn host major events and realizes a substantial profit for the event that should also mean that employees will earn a bonus. In this industry there will be times that are leaner than others, but there will also be times when profits will be high. Being aware of the rewards and being willing to share those benefits with our employees will prove that they are a valued commodity of Enchanted Bed and Breakfast. Intrinsic rewards are the feelings of accomplishment that team members experience when they reach a goal or the inn has a very successful large event. This euphoria also results in job satisfaction for employees. Happy employees provide a better experience for guests as well as other employees. This also will reduce absenteeism and turnover for the inn, because when people enjoy coming to work they look forward to the new challenges of the day. Employees set goals or targets in which they want to obtain as a result of their efforts. One must be committed to completing their goals, if they are not committed they will most likely fail to reach them.
It is important to determine a plan of action to reach the target. These plans should include a time table to meet expectations along the way, the results must be measurable and provide a specific outcome. When one sets these goals, short-term as well as long-term and reach them it provides an individual with a sense of self-esteem that no one else can provide. An individual’s self-confidence and self-worth are increased with each success. C4. Organizational considerations for structuring the work effort to successfully execute strategic plan According to Porter the chain of connected actions that complete a task is referred to as a value chain (Porter’s Value Chain, n.d). Enchanted Bed and Breakfast must determine which tasks they can complete and for which tasks they will need assistance. While one person can cook breakfast for up to ten people it is impossible to think that one person could successfully prepare a meal for one hundred and forty people. Enchanted has a caterer that they use for large events.
By outsourcing this task the inn keepers are free to attain to other duties that must be completed. However, it is critical that the management is never so tied up with preparations that they are no longer free to mingle with the guests and attend to their immediate needs and wants. Decorations for large events are usually addressed by the staff; however, Enchanted has another company with which they work to hire temporary employees for such occasions. The inn offers a basic set up included with the package, but should specialized decorations be desired the celebrants are responsible for providing them and may ask their friends to take charge of the decorations. When the guests take responsibility for the decorations the inn’s staff will assist if possible in an effort to be sure that the event meets the desires of the celebrant. Outsourcing provides the added staff needed to ensure that large events are as successful as small events and that the needs as well as the wants of the guests are met. Service is a value chain that must never fail.
Our function is to make their event successful with the look and feel of professionalism. When Enchanted Bed and Breakfast delivers a great experience they create a relationship with the customer that will generate return customers and therefore generate addition revenue. This revenue will eventually generate profit. Authority that is centralized impedes success. Staff must be able to make decisions about some of the details in which they will be challenged. This empowers employees to handle the less significant details and only seek managers to handle challenges that will impact the success, safety or profits of the event. Decentralized management allows management to concentrate on the guests of the inn, which is where their attention should be focused.
The prearranged details that management, employees and third party vendors share in preparation of the event provide value added benefit to all as the event is less stressful for all concerned. This collaboration allows the operation to runs smoothly. Guests sense an air of calm professionalism that puts them at ease and that allows everyone the freedom to perform their assigned tasks with little interference. Collaboration is key to success and when embraced by all, it becomes a valuable part of the services offered. C5. Current and emerging organizational characteristics
Management’s matrix structure is due the size of the business. It isn’t necessary to have a subdivision of managers, but each employee retains the empowerment to act on management’s behalf when necessary. Enchanted Bed and Breakfast’s empowered workforce communicates well and shares the responsibility of the inn’s daily tasks as well as its success. As stated previously collaboration is key to our organization, which is horizontal in nature, but requires teamwork to be successful. The inn’s workforce is focused on the providing a great experience to each guests, not the individual tasks that must be performed throughout the day. Enchanted Bed and Breakfast is a learning organization, not only due to the ongoing training of employees, but our commitment to embracing the newest innovations of our industry. We are constantly monitoring the market for new ideas that would provide value added amenities to our guests. Maintaining memberships in professional organizations for bed and breakfast lodging establishments will provide management with the ability to listen to new ideas of other bed and breakfast establishments, but also those that form partnerships with them.
It is equally important to share new ideas for completing common tasks. As others experiment with new software that is designed to address the needs of our business, it is imperative to learn which function well and those which are best avoided. The staff’s efficiency and expertise continues to grow through the professional development the inn provides as well as their successful business ventures. The inn’s management and staff are committed to giving guests wonderful memories of their visit and celebrations through providing the exceptional service that can’t be found elsewhere. It is also a goal to be ever mindful of all of the organization’s stakeholders. A stakeholder audit provided management with Enchanted Bed and Breakfast’s strategic constituency, which was larger than first expected. Each stakeholder group must be monitored independently to determine the inn’s impact upon them. It is imperative to the success of the business to maintain balance between the inn and all stakeholders at all times (Kreitner, 2010, page 520).
The inn must have a strategic plan to deal with any issues that arise due to conflicting interests. While addressing the organizational characteristics it is important that the Information Technology (IT) be addressed for the inn. The business will require an intranet that allows employees to share important information regardless of their location upon the property. This information must remain secure and be safeguarded at all times from intruders and vandals. Customers have entrusted the inn with their personal and credit information and failure to protect that information could quickly be the demise of the business. Enchanted will hire an intern from Ivy Tech Community College to assist with the configuration and maintenance of our IT system. The inn keeper is experienced with computers, routers and software and will be able to handle the day to day operations of the system, but it is imperative to have someone on call should their services be needed during a peak operation time.
The students would be recommended for the position by the Professor of Computer Informatics and Security. They would then apply for the position formerly, go through the selection process that includes an interview. The inn would make their selection and notify the student. The intern position would be a paid position, but would also provide the student with experience in which to add to their resume. Once selected the student would have the opportunity to maintain the job as long as their availability remained agreeable to the inn. Once the student would enter into full-time employment elsewhere they would no longer be eligible to keep the position with the inn. They would need to be able to respond to a call within a three hour window at any given time twenty-four hours a day. Professionals in the IT world are generally subject to this type of availability; therefore, it would be an acceptable requirement. However, exceptions would be made for their class times. It is possible that the inn would contract with two students that wanted to act as a team so they could share the availability, which is also a common practice in the field.
This provides the students with a realistic experience and expectation of work ethic as well as practical experience. Enchanted Bed and Breakfast embraces technology and will utilize technology to meet with vendors as well as other bed and breakfast owners to negotiate plans for events and discuss new ideas concerning the industry. We will also provide our guests with the ability to hold teleconferences for their business meetings. It could even be arranged to provide a live connection to a relative of a wedding party that could not make the trip due to illness, weather or distance. Embracing today’s technology completely offers guests another amenity they are unlikely to find at another bed and breakfast. Every idea must focus on providing our guest with an experience that others cannot or will not provide! C6. Recommend an approach leaders should use to make corrective adjustments during your company’s strategy execution.
Gathering data from which to manage a small business is a bit more challenging than that of a large organization where one has many points of information input. Enchanted Bed and Breakfast owners use all the information available to them concerning sells, costs, vendors and details of success and failures of engagement, but most importantly they manage by walking around (MBWA). MBWA is an effective method to see how tasks are accomplished and if shortcuts are being taken that could have a negative impact upon a guest’s experience. It also provides first-hand knowledge of how each person interacts with guests and if any corrective actions need be implemented. The owners must then analyze the data to see if any trends indicate problems that demand attention and take the action necessary to improve the process when indicated.
When a business finds it has problems following its strategic goals due to a mixture of cultural or subcultural ideas within the organization it must quickly implement actions to change the culture’s perceptions of the employees. Changing the culture is a four step process (Thompson, Strickland, & Gamble, 2012, page 405). 1. Explore the company’s present strengths and problems that prohibit the execution of the strategy. 2. Determine what activities must be changed to achieve the chosen performance requirements. 3. Communicate the needed changes to all levels of employees within the company. Explain why the changes are needed and how the changes will improve the company’s performance. 4. Proceed with implementation of the new expectations immediately. Employees must see the actions taking place and understand that the vicissitudes are not suggestions, but directives that will be enforced. Although it sounds good in theory to imply that management demand the change, it is not practical to approach change in that manner.
Management must lead by their example in a symbolic action, not just by their mandates. Human behavior tends to be apprehensive of change and if management wants the transition to be favorable they should begin the process by promoting the changes as a way to make their jobs easier and their output better than before with less effort. Employees will be more receptive to ideas that are supposed to be for their wellbeing than that of the company or management. By convincing key employees (not managers as much as those favored by other employees) and utilizing their buy in to the new implementation management can persuade employees to embrace the new ideas and the new procedures will soon become ingrained within the culture of the company. Enchanted Bed and Breakfast is small and has a limited number of employees, but change in the culture will still need to be handled in this manner to gain quicker approval of its employees.
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