entrepreneurship & tourism industry

8/13/2019 Entrepreneurship & Tourism Industry

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Entrepreneurshipand

Tourism IndustryProfessor Orhan z, Ph.D.

Yaar University

Faculty of Business & Economics

Dept. Of Tourism Management

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Contents

1. Basic definitions2. The concepts and types of entrepreneur and

entrepreneurship.

3. Whyand howto becomean entrepreneur.4. The common characteristicsof

entrepreneurs

5. Entrepreneurship opportunitiesanddomains in Tourism and Travel Industry

6. Future trendsof the industry

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Entrepreneurship defined

It is the innovatoryprocessinvolved in thecreation of aneconomic enterprisebased on anew product orservicewhichdiffers significantly from productsor services in the way itsproduction is organized, or in itsmarketing.

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What is Entrepreneurship?

1.The Process of Initiating aBusiness Venture, Organizing the NecessaryResources,

Assuming the Associated Financial,Psychological and Social Risks&Rewards

2. Having the Characteristicsof anEntrepreneur, e.g.

Brave, innovative, independent, andachievement oriented

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Entrepreneurship Defined

There is no universally accepteddefinition of entrepreneurship. Attemptshave traditionally been made to describe

it relative to: an economic function ownership structure

degrees of entrepreneurship size and life-cycle of firm and

resource base

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Process of entrepreneurship: Definition approaches and features

Approaches Features

Economic function

Ownership structure

Degrees of entrepreneurship

Resource base

Size and life-cycle of firm

Consolidation approach

Personal initiative of entrepreneur Risk-bearing function

Harnessing of factors of production

Creat ion of b usiness w ith entrepreneur as founder

Size of the firm

Personal financial risk

Creativity and innovation

Growth realization

Primordia l (pr im ary) to potent ia l product ion process

Association with young start-up firm

Conditions of uncertainty and competition

Entrepreneurial management and strategy

Initiation of change

Innovatory process

Ownership, structure and size of firm irrelevant

Personal initiative through the spirit of enterprise

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What is an Entrepreneur?

One who creates a new business

in the face of risk & uncertainty

for the purpose of achieving profit &growth

by identifying opportunitiesand assembling the necessary

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Who Are Entrepreneurs?

Persons who start and/or operateabusiness.

Individuals who discover market needs

and develop new ideasto meetthoseneeds.

Risk takerswho provide an impetus for

change, innovation, andprogress.All active owner-managers(founders

and/or managers of small businesses).

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Varieties of Entrepreneurs

Founder(Pure Entrepreneur)

A person who brings a new firminto existence.

Administrative EntrepreneurAn entrepreneur who oversees the operationsof an

ongoing business

FranchiseeAn entrepreneurwhose power is limitedby the

contractual relationship with afranchising organization.

Entrepreneurial Team Two or more people who work togetheras

entrepreneurs.

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Key Elements of Entrepreneurship

Elements Description

Change initiation Capability to identify an opportunity for

creation or innovation, and the ability to turn it

into a reality

Commitment to

employees

Application of appropriate management

practices and reward systemsdesigned toexact employee loyalty, retention and

efficiency

Creative

resourcing

Ingeniously (creatively) marshalling resources,

of both financial and managerial nature, from a

complex set of sources in order to mobilize

and realize the opportunity

Entrepreneurial

learning

Motivation to acquire the necessary knowledge

and expertisethrough relevant exploration and

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Key Elements of entrepreneursh ip

Elements Descr ipt ion

Innovation and

creativity

Renewal of products and servicesby adding

value through application of expertise and

imagination

Knowledgeleadership

Development of sources of managementinformation to enable first-mover capability,

and effective strategy formulationand

implementation

Opportunity

alertness

Continuous focus on emerging trendsand

opportunitiesto be captured and realized

Relationship

management

Maintenance of effective teams, networks,

and flexible managementstructures

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Key Elements o f entrepreneursh ip

Elements Descr ipt ion

Risk and

uncertainty

management

Evaluation of personal and financial risk

elements, self-confidence and

determination to succeed

Timing of action Acting within a limited window in which an

opportunity can be optimized

Vision and

strategic

orientation

Formulation of ambitions, and strategies to

realize them

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COMPARING ENTREPRENEURS TOPROFESSIONAL MANAGERS

ENTREPRENEUR PROFESSIONAL MANAGER

Founder and organizer Keeper and trainer

Committed to his firm Committed to his profession

Moderate risk taker Avoids taking risks individually

Long term strategic thinking Medium term operational thinking

Visionary Rational

Achievement oriented Power oriented

Centralizing authority Delegating authority

Comfortable on his/her chair Restless about his post

Commanding Both commanding and commanded

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Profit

Freedom from the limits

of standardized pay for

standardized work

Independence

Freedom from supervision

and rules of bureaucratic

organizations

Escape from an

oppressive culture

Personal Fulfillment

Freedom to achieve a

satisfying way of life

Escape from routine

and unchallenging work

Rewards of Entrepreneurship

Why to become an Entrepreneur?

MakeMoney

Be YourOwn Boss

Enjoy aSatisfying Life

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Rewards of Being an Entrepreneur

o High degree of independence-freedom fromconstraints

o Get to use avariety of skills and talents

o Freedom to make decisions

o Accountableto onlyyourself

o Opportunity to tackle challenges

o Feeling of achievementand pride

o Potential for greater financial rewards

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Benefits of Small BusinessOwnership

The opportunity to:

create your own destiny

make a difference

reach your full potential

reap unlimitedprofits

contributeto society and be recognized foryour efforts

do what you enjoy and have funat it

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Challenges ofBeing an Entrepreneur

Must be comfortable with change anduncertainty

Must make a bewildering number of decisions

May face tough economic choices

Must be comfortable with taking risks

Need many different skills and talents Must be comfortable with the potential for

failure

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Drawbacks of Small Business Ownership

Uncertaintyof income

Risk of losing entire investment

Long hours andhard work Lower quality of lifeuntil the business gets

established

High levels ofstress

Complete responsibility Discouragement

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Personal Qualities of Successful Entrepreneurs

Creativity6.2 %

Personality10.4 %

Need for Achievement

10.4 %

Leadership12.5 % Risk Taking

16.7 %Energy

43.8 %

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The Tourism Industry a glance at

Means millions of people moving from thecountries they live and work to anothercountry, or countries

The Third Largest Industryall over the worldafter Petroleum and Electronic,

Producing 935million international visitors(2010),and

$ 852Billion (US)Revenues (2009),and The largest and fastest growing services

industry

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On the Demand side

Tourists motivations and behaviors - traveling

people

On the Supply side

Sectors that satisfy tourist needs and supplying

products - tourism businesses and products

Infrastructure

Components that an areas residents rely on, such

as airports, highways, harborsthat serve visitors

Superstructure

Facilities built to accommodate tourist needs,

hotels, restaurants, theme parks, casinosetc.

Tourism Industry

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Narrow senseConsists of what the tourist buys (Mostly

goods and services) Wider sense

Combination of what the tourist does at

the destination and services used(package)

Tourism Product

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Tourism products are generally non-

tradable services, such as;

a dream,

total experience,

activity, or

business opportunity.

Tourism Product


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Characteristics of tourism products;

Mostly services, which is intangible(e.g., cannot be inspected physically)

Psychological in attraction

Varies in quality and standards

Supply fixed (e.g., more hotel roomscannot be instantly created to meet demand)

Meet/satisfy social needs, not necessities

The Tourism Product(contd.)

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Combination of phenomena andrelationships

Has 2important elements;

- dynamic (the journey)and- static (the stay / accommodation)

Movement to destinations is temporary

Not connected with paid work Tourist goes to the product, not to the

market

Characteristics(contd.)

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Tourism products are not used up

Mostly labor-intensive

Peopleoriented (face to facerelationships)

Multi-dimensional

Seasonal Dynamic

Characteristics (contd.)

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Tourism and leisure industry involves acomplex set of interrelated businesses

Hospitality, travel and tourism

businesses consist of; Retailers

Transportation sector(carriers)

Recreation or gaming facilities

Hotels and restaurants (Hospitality)

Interrelated Business

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Accommodation providers (1)

Hotels Most significant and visible subsector

The largest partof the industry

Major employer in the industry

Dominated by small, family-run operationsoffering a variety of accommodationtypes

Groups or chains of hotels account for about10

% of total accommodation The major chains continue to grow in terms of

number of hotels and number of rooms

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Guesthouses, bed and breakfasts,farmhouse accommodation, innsprovide limited facilities and food and

beverage.

Self catering accommodation,

apartments, cottages, sitescompriseaccommodation, recreational facilitiesand food preparation facilities.

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Types of accommodation providers(3)

Time sharevery popular inMediterranean holiday resorts, thisprovides the opportunity to own an

apartment for a week or two per year.Youth accommodationYHAand

backpackers accommodation. This is

very popular in Australia wherebackpackers form approximately 10 % ofall international tourists.

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Camping and caravan sitesrangingfrom basic fields with few amenities

to sophisticated resorts. Medical facility accommodation

providing accommodation for the

increasingly important medicaltourism industry

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The distinctive nature of accommodation

Accommodation is distinct from otherindustries in three basic areas:

It comprises both tangible(product) andintangible(service) factors;

The production and consumption ofaccommodation is inseparableand theguest must be present at both production

and consumptionAccommodation is highly perishable and

cannot be stored for future sale.

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Travel Intermediaries

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The Nature of Intermediation

Benefits

Producers are able to sell in bulk and so transferrisk to intermediaries

Producers can reduce promotioncosts by

focusing on the travel trade, rather thanconsumer promotion, which is more expensive

Consumers can avoid search and transactionscosts

Consumers can benefit from the specialistknowledge of intermediaries, their market powerand the resulting lower cost of products

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Other Industry Segments(1)

Lodging Operations

All Suit Hotels

Casino Hotels

Conference Centers

Full Service Hotels

Limited Service Hotels Resorts

Retirement Communities

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Industry Segments (2)

Food Service Operations Commercial Cafeterias

Education Food Service

Employee Food Service Full - Service Restaurants

Health Care Institutions

Lodging Food Services

Quick Service Restaurants Recreational Food Services

Social Caterers

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Travel Related Businesses andEntrepereneurship Opportunities (1)

Marketing Representative/Agent

Travel Agent

Recreation Specialist

Incentive Travel Specialist

Policy Analyst

E-tourism Expert/Specialist

Destination Development Specialist

Tourism Investment Projects Consultant

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Travel Related Businesses and

Entrepereneurship Opportunities(2)

Tour Wholesaler

Tour Broker

Travel Counselor

Meeting/Conference Planner

Advertising Agency

Entertainer/Animator

Health Specialist (Health SPA etc.)

Small Business Owner (Guest House, Hotel,Restaurant, Souvenir shop etc.)

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Doing Business in Tourism Industry

Tourism and travel Industry has the

reputation of being a relatively clean and

pleasantindustry in which to invest Requires relatively low start up capital

Setting up in the industry is often seen as

simple and requiring few skillsother thanthe off-claimed ability to get along with

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Doing Business in Tourism Industry

It is therefore attractive to those leaving from otherjobs and investments or do not enjoy them, to buyinto a bar, guest houseor travelbusiness forexample.

Provides opportunities for those who would like to useindividual skills in a beautiful environment. i.e., a chefmay happily work in pleasant resort and a tour

guide/travel agent use his/her talents in the relatedfield

Provides new business opportunities, such as eventmanagement

I d t F t


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Year # of tourists Total tourism income

1950 25 2.1

1960 70 6.8

1970 165 18

1980 285 105

1990 458 268

2000 698 475

2002 714 470

2008 913 941

2009 877 852

2010 935 -

2023(prediciton) 1700 2000

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Industrys Future


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Future Markets

Keep in mind that the new tourists are

Knowledgeable, discerning, seeks

quality and participationAgeing

Motivated by education and curiosity

Sophisticated and flexible

Technologically skilled44


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Before Starting up,ASK YOURSELF! - 1

Is Entrepreneurship For You? There is no way to eliminate all the risksassociated with

starting a small business. However, you can improve your chances of success with

good planning and preparation. A good starting place is to evaluate your strengths and

weaknessesas the owner and manager of a small business.Carefully consider each of the following questions.

1. Can you start alone? It will be up to you - not someone else telling you to

develop projects, organize your time and follow through ondetails.

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2. How well do you get along with different personalities?Business owners need to develop working relationshipswith a variety of people including customers, vendors,staff, bankers and professionals such as lawyers,

accountants or consultants. Can you deal with ademanding client, an unreliable vendor or cranky staffperson in the best interest of your business?

3. How good are you at making decisions?

Small business owners are required to makedecisions constantly, often quickly, under pressure,and independently.

Before Starting up,

ASK YOURSELF! - 2

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4.Do you have the physical and emotional stamina(power) to run a business?

Business ownership can be challenging, fun and exciting.

But it's also a lot of work. Can you face 12 hour workdays 6 or 7 days a week?

5. How well do you plan and organize? Research indicates that many business failures could have

been avoided through better planning. Good organization of financials, inventory, schedules,

productioncan help avoid many pitfalls.

Before Starting up,

ASK YOURSELF! - 3

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6. Is your drive strong enoughto maintain yourmotivation?

Running a business canwear you down. Some business owners feel burned outby having

to carry all the responsibilityon their shoulders. Strong motivation can make the business succeed

and will help you survive slowdownsas well asperiods of burnout.

Before Starting up,

ASK YOURSELF! - 4

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7. How will the business affect your family?

The first few years of business startup can be hardon family life.

The strain of anunsupportive spousemay be hardto balance against the demands of starting abusiness.

There also may be financial difficultiesuntil the

business becomes profitable, which could takemonths or years.

You may have to adjust to a lower standard of livingor put family assets at risk.

Before Starting up,

ASK YOURSELF! - 5

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You get to beyour own boss. Hard work and long hoursdirectly benefit you, rather

than increasing profits for someone else. Earning and growth potentialare far less limited. A new venture is exciting. Running a business will provide endless variety,

challenge and opportunities to learn.

It's true, there are a lot of reasons not to start your own business.But for the right person, the advantages of business ownershipfar outweigh the risks.

Before Starting up,

Motivate YOURSELF!

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End of Slides.

Thanks for attention!

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