3rd Edition Strategic Management In Tourism Edited

Transcript:3rd Edition Strategic Management In Tourism Edited:
3rd Edition Strategic Management In Tourism Edited by LUIZ MOUTINHO AND ALFONSO VARGAS SÁNCHEZ COMPLIMENTARY TEACHING MATERIALS CABI TOURISM TEXTS CHAPTER 9 Financial Management in Tourism JAMES M. WILSON AND LUIZ MOUTINHO CABI TOURISM TEXTS LEARNING OBJECTIVES To develop an understanding of the financial effects of management decisions and policies. To develop a comprehension of the impact of pricing policies on an organization’s financial performance. To develop an appreciation of service and product design issues and their relevance to financial performance. To present a perspective on the financial consequences of alternatives available for promoting an organization’s services and products by developing a basic comprehension of financial statements and their relevance for management decisions. To show how the marketing mix interacts with financial management and the impact different elements within the mix may have on an organization’s finances. CABI TOURISM TEXTS CABI TOURISM TEXTS STRATEGIC MANAGEMENT IN TOURISM A basic understanding of financial management is essential for managers in the tourism industry. Financial management is central to planning, measuring and controlling many activities and managers that understand and can use this information can act on it more effectively. The learning objectives focus on those dimensions of financial management most relevant to a manager’s effectiveness. CABI TOURISM TEXTS STRATEGIES A key decision is identifying and developing products and services: new products/services to be introduced, or old ones to be withdrawn or ‘improved’; product/service ‘ranges’, ‘lines’ and ‘portfolios’; product/service positioning vis-à-vis competitors; branding; and product/service and facility characteristics. This investment is made with a view to potential returns from their successful exploitation later. The supporting marketing research that helps understand markets and their needs is also a form of investment. CABI TOURISM TEXTS New service introduction case A new service will cost a total of £250,000, it has a 5-year life expectancy and yields sales revenues of £300,000 in the first year increasing by £100,000 annually until the end of the fifth year, with direct costs of 70% of revenues and allocable overheads of £75,000 per annum. Depreciation of new equipment is £20,000 annually with no salvage value at the end The company pays 40% tax on its profits. Similar projects in the past have been evaluated using a 15% discount rate. Is introducing this new service beneficial? STRATEGIC EXAMPLE CABI TOURISM TEXTS TABLE 9.1 Time-phased analysis of the impact of introducing the new service. CABI TOURISM TEXTS TABLE 9.2 Projected discounted cash