Decision-Making and Problem-Solving Techniques in Hospitality


The hospitality and tourism industry is influenced by environmental changes and new customer demands. In order to meet these challenges, hospitality and tourism operators introduce effective methods and techniques of decision-making and problem-solving. The management process has always made a distinction between vertical and horizontal relationships. Under the earlier traditional approach, vertical relationships were subject to the command authority of the managers at each level. In most respects, the management process reflected military organizational principles. Horizontal relationships, mandated by the organizational structure, were defined on the basis of staffing and other bargaining interfaces and dialogues for the development of consensus (Salaman 52). What has changed is the vertical process. The command authority of the manager now has to defer to a consensus-based relationship with subordinates reflected in such concepts as participative management, collective decision making, and authority acceptance. The aim of the paper is to analyze and evaluate key operational functions of the hospitality industry, assess hospitality and business performance, explore performance improvements techniques and examine the factors affecting problem-solving. The paper will be based on cognitive mapping methodology.

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In the hospitality industry, the original distinction between vertical and horizontal relationships produced a hybrid system with the vertical relationships based on command and the horizontal on consensus development. The term “management by bargain” reflected the negotiation reality of the dialogues for the resolution of issues between interdependent horizontal elements. In the case of vertical relationships, bargaining was viewed as an exercise in leadership (i.e., the substitution of bargaining for command authority) (Salaman 48). The downgrading of the use of command in the vertical chain in favor of a more consensus-oriented approach has increased the scope of bargaining by erasing the former distinction between vertical and horizontal relationships. For example, managers can no longer command compliant behavior, authority acceptance, or commitment to the organizational interest of their subordinates. They must bargain for it. Despite the resulting increase in internal bargaining, however, the system remains hybrid in that the organization itself continues to operate by command from the executive suite down the managerial chain of command. Symbolic of the command glue that holds the entire organization together is the pervasiveness and authority of organizational culture, codes of ethics, and other normative policies of the organization (Chase and Jacobs 34).

The changing nature of the hospitality industry demands that the vertical interface between managerial levels tends to be command-oriented at higher levels, with greater emphasis on consensus development at the lower levels. The crunch comes at the first-line managerial level where command authority is to give way to participative management, collective decision making, and other forms of authority acceptance. The operational effect is that the first-line manager has to implement by bargaining the instructions he has received from the command channel of supervisory managers. This is not a simple, mechanical extension of management bargaining to the leading function. Managers need more operational guidance to handle the crunch than the conventional horse-trading and deal cutting involved in consensus development in horizontal relationships. One would expect to find the answer in the considerable emphasis in the literature on the importance of motivation in influencing subordinates’ behavior (Salaman 68). The problem is that motivation, the closest one that comes to an operational approach in the management process, has not progressed beyond the theory stage. The best that one can say is that the approach to motivating the “employee” is still quite theoretical with a variety of competing theories relating to the identification of the factors involved in motivation (i.e., the content approach) and the most effective way to motivate (i.e., the process approach). There is no single motivation theory or process. The negotiation process’s concern for continuing relationships is an important element in friendly persuasion, the preferred basis for consensus. A good workplace relationship softens the impact of pressured persuasion when friendly persuasion does not produce the desired consensus. The pressuring possibility permits negotiation to go beyond friendly persuasion and function as a system for controlling situations and relationships. As a control system, negotiation can be a most useful tool of consensus development because of the premium it places on the maintenance of a good workplace relationship. The management process also stresses the use of relationship nurturing and maintenance to influence desired behavior (Chase and Jacobs 34).

Hospitality and tourist operators try to optimize capacity and productivity outputs through effective decision-making techniques. The dialogues of management can, through friendly persuasion (based on personalization and other relationship nurturing) or pressured persuasion, be used to influence desired action or inaction. Concurrence or consensus in the management process can be reflected in express agreements or arrangements, or implied from acquiescence or other supportive or compliant behavior. The same is true for negotiation: there need not be a formal dialogue or a formal conclusion of the dialogue. Actions speak as loudly as words. Accordingly, it is no great stretch to treat action or behavior in support of a manager’s policy or request as the consensus result of the manager’s bargaining effort to influence or motivate the behavior of his subordinates. The absence of a formal dialogue does not change the basic nature of the bargaining process which produces compliant behavior. The management and negotiation processes have much more in common. Both involve the pursuit of interest: the former, the organizational interest; the latter, the desired interest in a particular situation or relationship.

Slack‚Äôs five performance objectives are speed, dependability, quality, flexibility, and cost. For hospitality and tourism operators, speed is one of the main factors that affected all operations. Furthermore, both processes are consensus-oriented and usually result in the conclusion of a transaction; the settlement of controversy; or the establishment of a position, policy, or arrangement (Slack et al 22). In the management context, the conclusion of a transaction can be with an outside organization (e.g., traditional negotiations with a labor union, a supplier, or a purchaser); the settlement of controversy can involve intervention in the dialogues of organizational elements competing for material resources, personnel, or mission assignments; and the establishment of a position, policy, or arrangement can be the result of organizational dialogues related to the substantive content of organizational policies, culture, and codes of ethics and conduct. In both the management and negotiation processes, the usual purpose of bargaining is to define or control situations and relationships. Flexibility leads to a competitive position and high quality of all services delivered to a customer. It helps operators adapt to changing circumstances quickly, without disrupting the rest of the operation. Relationship control is also an important bargaining technique. Quality and cost influence customers’ decisions to purchase and use services. As decisions are made about who should participate on the planning team, individual time frames should be considered. Individuals vary radically in terms of the time periods they can think out, organize, and work through. It is taxing to some people to determine what they have to do today, and in what order (Teale 24). Dependability means that tourism operators have to meet the demands and changing preferences of potential customers. Environmental factors have meaning for an organization relative only to its actual and potential resources. It is essential that an organization’s self-knowledge be based on a thorough inventory of its strengths and shortcomings before shaping its strategies (Chase and Jacobs 76).

Performance improvement techniques can involve low price and high quality, fast delivery and excellent services, innovative approaches to business, and new tourism destinations. Contentious improvements will help any operator to save costs and deliver high-quality services for diverse customers audiences. Incremental innovation allows us to understand that marketing and the consumption process require a perspective of current purchases for future use (Teale 34). A time discrepancy usually exists between the actual purchase of items and acts of consumption, and the lag has significant marketing implications. In particular, it stresses the importance of many postpurchase marketing activities in cultivating and building demand. Advertising, for example, is often directed to those who have already bought a product and is designed to assure them they made the right selection (Teale 64). The resource audit helps an organization understand its service techniques and processes, how it is financed, and who its managers are. The latter point may be less often considered, but it is crucial. An organization populated with long-tenured, solid, and dependable “technical types” may want to think twice before embarking on a highly innovative entrepreneurial venture requiring creativity and flexibility. An opportunity to provide a new service may not really be an opportunity for an organization unable to finance the initial capital investment required. The opportunities, therefore, should be close to the current service delivery capability of the organization (Chase and Jacobs 82).

Decision-making techniques involve decision trees and Pareto analysis, cost-benefit analysis, and force field analysis (change analysis). The organizational interest is served by the foregoing approach because it benefits from the decision maker’s personal interest and effort in controlling each supporting dialogue. In effect, the decision-maker addresses and works out the concerns of the interested parties in each of the component dialogues as part of the decision-making process. The usual result is a rational decision acceptable to all the interests involved. At the present time, the managerial playing field is not level (Teale 124). Those managers who treat their dialogue involvements as bargaining can be expected to prevail in their resolution. The dialogues of those who don’t, tend to be unsuccessful mismatches that do not serve the organizational interest (Harris 28). That interest is best served by complete, problem-solving dialogues and resolution on the merits without the skewed results produced by a difference in negotiating skills and techniques. The institutionalization of effective negotiation as a managerial skill coupled with the recognition that the staffing interface is essentially bargaining should go a long way toward leveling the playing field. At the very least, it should alert all involved that personal interest may not be pursued in the name of the organization (Hage 597).

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The main problem is that neither of the decision-making approaches reflects real-world situations and change. All of them propose hypothetical problem-solving methods based on predictions and forecasts. From the operational point of view, the monitoring and control by supervisory managers can be most effective when it focuses on the staff input and advocacy of elements potentially affected by organizational policy or action (Fitzsimmons and Fitzsimmons 55). The performance of these elements should be closely monitored to assure the quality of their inputs and the appropriateness of their advocacy. Good decision-making depends on responsive and complete staff support, and managers at all levels must control the quality of this support. A distorted picture of the issues and the costs and benefits involved in a proposed policy or action, prompted by a desire to influence the decision for career or other personal interests, does not serve the organizational interest. Breakdown of supervisory control at this point should carry serious consequences for those who fail to perform their duty to the organization (Harris 28). Again, the control process cannot eliminate informal lobbying and other forms of politicking to influence senior-level decision-makers to protect career and parochial interests. Nevertheless, such politicking should be reported to higher levels of management in an effort to preserve the integrity of the organizational process. Reporting (e.g., to the organizational ombudsman) should be mandated because the knowledge that such activities are being reported may inhibit politicking within the organization. Furthermore, the organizational code of ethics should treat commitment to the organizational interest as an ethical issue because it is implied in the employer-employee relationship. No matter how carefully that commitment is codified, the organization still has to bargain for it. Those supervisory managers who monitor the action officer’s performance assure that the dialogue he conducts and the consensus he proposes is in the organizational interest (Fitzsimmons and Fitzsimmons 82).

Problem-solving can be explained as a high-order process that involves cognitive and thinking skills. In the hospitality and tourist industry, successful marketing requires recognition and authority at the top decision-making level. Marketing programs must be carefully planned and based not merely on knowledge of internal corporate affairs, but also on knowledge of external environments. A homeostatic point of equilibrium between customer wants and needs is called for on the one hand and corporate goals and resources on the other. Business organizations in the future are more likely to make fundamental and continuous corporate adjustments to the demands of shifting market environments. To date, relatively few have truly adopted a market orientation, despite the lip service that has been paid to marketing as an orientation in business (Fitzsimmons and Fitzsimmons 42). Such factors as continued economic growth, increased disposable income, vigorous domestic and foreign competition, accelerating technology, automation, population decentralization, expansion, and innovation will spur the appearance of this new marketing form.

Hard problem solving can be explained as a heavy critical thinking method. The quantitative concepts and techniques known as operations research have led to better intelligence and decision-making in marketing. Through them, problem-solving in marketing has become more scientific (Hicks 62). Operations research provides marketing executives with quantitative bases for making decisions concerning the operations under their control. It improves the ability of marketing executives to perceive and manage present and future situations. Operations research is not merely a set of tools or techniques; it is an approach to problem-solving. Its contributions stem from the adoption of a systems perspective, the development of various models useful for predictive purposes, the emphasis on experimentation, and improved operational information. Operations research is the use of scientific personnel in the solution of new problems, problems that may be quite unrelated to their original discipline. It includes techniques suggested by such terms as Markov processes, waiting-line theory, linear programming, game theory, simulation, decision trees, and pay-off matrices. Cloaked in technical language, it has been fostered by available technology, especially large-scale computers. Operations research reflects two striking differences in the approach to obtaining marketing intelligence: the tools used, and the viewpoint and perspective adopted. Mathematical models and statistical techniques are part of the normal equipment of the operations researcher. He has a strong predilection for generating intelligence and solving problems by means of mathematical applications. He uses tools that are standard to most scientists in solving business problems.

Hard methodologies are based on mathematical models and precise objectives (Hicks 72). Marketing intelligence is the basis of effective and logical marketing decisions. Marketing intelligence comprises internal, environmental, position, projected, and decision intelligence. They differ in scope, nature, and purpose. Marketing intelligence also differs from data. The database, which includes opinions, attitudes, and judgments, as well as facts, must be analyzed and collated to generate information from which marketing intelligence can be gleaned. Marketing intelligence results when data are transformed into realistic policies and decisions. Computers play a significant role in developing and extending marketing intelligence systems (Hicks 92). They provide relevant and timely data, thereby extending powers of analysis and providing the basis for simulations. The functional area directly responsible for developing marketing intelligence systems is marketing research. Both marketing research and operations research provides the basic qualitative and quantitative research inputs for marketing intelligence systems.

Recent developments in applying quantitative techniques, particularly the concepts of decision theory, are having a great impact on marketing management. Marketing decisions are made to solve problems — to overcome barriers and capitalize on unsatisfied opportunities. Decision-making starts with the difficult task of defining problems — problems of fact or problems of value. The latter is usually the most difficult to handle. They fall into the category of normative decision theory. Once problems are defined, alternative strategies must be developed and evaluated before decision criteria can be applied logically (Jeynes 62). Decision-making under conditions of complete certainty and complete uncertainty form the anchor points of the decision spectrum. Marketing decisions are usually made under conditions of risk. Several useful decision criteria are noted, including expected value, minimax, optimism, and regret. The role of models, particularly quantitative models, in reaching marketing decisions is discussed. Both of the basic model building processes-model building by abstraction and by realization — are analyzed. This is followed by a brief discussion of the use of computers by marketing management. Where products are relatively homogeneous; several large firms constitute a significant part of the market, and buyers are well informed, then estimates of buyer reaction become a significant aspect of the pricing picture. So do competitive reactions that may be ferreted out by the use of marketing intelligence. Studies of what competitors have done in the past, coupled with detailed analyses of the current competitive situation, may furnish guides on what they are likely to do (Jeynes 92).

Deterministic models refer to events that have no random or probabilistic aspects but proceed in a fixed predictable fashion. Stochastic models involve random or probabilistic directions. The use of operations-research tools and techniques flows from the desire of marketing executives to obtain more adequate intelligence regarding the relevancy of objectives, determining alternative strategies, making decisions, and measuring and controlling results. This generation of quantitative intelligence leads to more rational marketing policies and programs. Similarly, various probabilistic models have been used to increase the effectiveness of advertising expenditures and establish brand policies. Simulation models have been applied to problems of marketing policy (Jeynes 88). It is true that to some extent critical marketing problems appear to be mathematically intractable. They lie somewhere between the problems of applied engineering and those of the behavioral sciences. Most marketing executives, however, do not understand operations research techniques. As a result, two opposing reactions occur. On the one hand, there appears to be a tendency to treat operations research with a halo effect. On the other hand, there is suspicion and a negative reaction. The latter often leads to outright rejection of the idea that marketing activities can be quantified. Many marketing executives have strong reservations about operations research, feeling that it is an expensive luxury that only large firms can afford; that the intelligence generated is based on data that businesses usually do not have readily available; that operations research cannot be used unless adequate records are kept; and that the underlying assumptions and restrictions made by operations-research people seriously limit the usefulness of its information in decision making. Some executives feel that good judgment, experience, and common sense form the core of marketing intelligence and that there is no need to complicate the matter with mathematical tools. But such a perspective is harmful. Properly applied operations research can furnish valuable information (Johnston 92).

Operations research has had a favorable influence on marketing management and has demonstrated that under conditions of uncertainty, decisions can be subjected to systematic, rigorous analysis. This permits complex marketing problems to be attacked in a scientific manner. Through specific models, intelligence may be acquired to help solve marketing problems. In particular, transportation, warehousing, inventory, and advertising problems have been solved by these techniques. Moreover, by extending the methods through which information may be gained, and by using simulation techniques, operations research has provided methods for evaluating policies before they are applied. Marketing management may thus make better decisions and quantify dimensions of problems that previously could not be quantified. However, despite its models and quantitative tools, operations research cannot replace the judgment of marketing managers as decision-makers. They alone must bear the full responsibility and authority for decision-making. All that operations research can do is to provide more pertinent and adequate quantitative information (Johnston 36).

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The relationship between subordinate and supervisory managers is tilted toward the supervisor because he periodically evaluates the performance of his subordinate, controls task assignments, and judges whether he should receive awards or other recognition. This feature of organizational life gives the supervisor leverage over the subordinate who cannot afford to forget that his career depends on how well he (1) gets along with his supervisor and (2) impresses him with his performance. This is an effective remnant of the authoritarian-manager concept which frequently manifests itself in the subordinate’s general deference to, and support of, the supervisor. It also inhibits subordinate support of positions that the supervisor opposes. While, in some instances, this may result in the organization not getting the benefit of the subordinate’s innovative thinking, the result is generally positive because it contributes to the supervisor’s successful fulfillment of the leading and controlling functions. They rely on societal changes and generally on the introduction of new legislation or collective bargaining contracts to increase the say of employees at lower levels (or their representatives as it were) in organizational decision making. As such they are gigantic real-life experiments in the wholesale promotion of externally induced organizational change because they stipulate new organizational structures and processes. Hence they will affect also any traditional notion of leadership and management (Chase and Jacobs 85).

Marketing decisions are usually made under conditions of considerable risk, and it is impossible for an executive to be sure that any specific decision will turn out to be the best one. All the decision-maker can hope to do is obtain information to restrict the elements of indecision in a situation. Managers are forced to accept risks; they must gamble. Marketing executives are placed in the uncomfortable situation of having to choose the best course of action by evaluating relevant factors on the basis of imperfect information at a specific point in time. They know that the decision may eventually prove to be a poor one. The “right” decision consists of choosing the best possible course at a particular time regardless of how the results may be evaluated in the future. Given perfect information, there would be no need for evaluations or judgment. Wrong decisions would result only from mistakes. But perfect information is not available, and the difficulties and rewards of decision making stem partly from the inadequacy of information. For instance, it is difficult to predict what competitors will do in the face of various strategies, and their actions greatly influence decision outcomes. Confronted with the problem of balancing the acceptance of estimated risk with estimated payoffs, marketing executives must decide whether to take additional risks and to what extent the risks will enhance profits. Extreme decision situations are relatively easy to handle. For example, if a company is strapped for money, and if a wrong investment decision may threaten its very existence, then the criterion of least risk may be adopted. Regardless of expectations of profit inherent in other choices, the decision-maker elects that alternative with the least risk or the greatest chance of success. Conversely, in situations where relative costs or losses will have little impact on a company, the executive may choose to “go for broke.” Several criteria are useful in helping executives to balance risk and payoffs and to choose strategies in less obvious instances. Others tend to a policy of followership — innovative imitation. They are neither in a position nor choose to risk the resources on the development of new ideas and new market segments (Chase and Jacobs 35).

The operational checklist of effective negotiation stresses the importance of viability and concern for continuing relationships in pursuing organizational goals. The organization’s continuing relationship with the public, the media, and other scrutinizing audiences pressure it to behave ethically. Experience has shown that the organization needs protection from both immoral and amoral managers. The organization has to rely on the ethical commitment of managers to serve its interests, including protection from unethical behavior which may be imputed to it and for which it may be held accountable (Naylor 43). Unethical behavior is no longer a viable option for the organization–only moral management makes sense. The operational checklist of effective negotiation stresses the importance of viability and concern for continuing relationships in pursuing organizational goals. The organization’s continuing relationship with the public, the media, and other scrutinizing audiences pressure it to behave ethically. Experience has shown that the organization needs protection from both immoral and amoral managers. The organization has to rely on the ethical commitment of managers to serve its interests, including protection from unethical behavior which may be imputed to it and for which it may be held accountable. Unethical behavior is no longer a viable option for the organization–only moral management makes sense (Chase and Jacobs 35).

Although managers cannot be trained to be ethical because there is no general consensus concerning what constitutes the proper ethical standard for organizational behavior, it does not mean that certain generally accepted principles cannot be included in codes of conduct or organizational credos to remind managers of their moral responsibility to the organization. The organization can provide both. It can mandate training in the effective negotiation system and the use of the system as the operational adjunct to the management process. Operations outside the organization have also expanded because improved competitiveness demands rational cooperative activities with other organizations (e.g., more cost-effective sourcing of products and services) (Salaman 88). The result for the organization is that bargaining is truly everywhere. The truism that organizational effectiveness depends on the quality of its managers suggests that the organizational need is for motivated bargaining managers, empowered by the leverage of the effective negotiation system to serve the interests of the organization better (Naylor 13).


In sum, there are many situations in which each tourist-consumer choice does not involve a new decision process but becomes rather habitual. Reliance on habit is especially evident in many purchases of convenience products. Here the expectations are based on past experience and learning and circumvent the decision process. However, in situations involving important decisions, where there is less experience available, buyers will go through a more intensive process of information gathering and decision making. Where incentives are strong enough and the expectations are high or great, the buyer does not act habitually and is willing to put some effort into solving his consumption problems.

Works Cited

Chase R.B., Jacobs R.F. Operations Management for Competitive Advantage with Student-CD, Hill/Irwin; 10 and, 2003.

Harris N. Service Operations Management, Cassell, 1989.

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Fitzsimmons, J. & Fitzsimmons, M. Service management: operations, strategy, information technology. 4th Edition, McGraw-Hill, Irwin, Europe, 2004.

Hage, J.T. Organizational Innovation and Organizational Change. Annual Review of Sociology. 1999, p. 597.

Hicks, M. J. Problem Solving and decision making: hard, soft and creative approaches. 2nd Edition, Thomson, London, UK, 2004.

Jeynes, J. Risk Management: 10 Principles. Butterworth Heinemann, Oxford, UK, 2002.

Johnston R. Cases in Operations Management, 3rd Edition Pearson Education Limited, 2003.

Naylor J. Introduction to Operations Management, 2nd Edition Pearson Education, 2002.

Salaman, G. Decision making for Business. Sage, London, UK, 2002.

Slack, N. et al. Operations and Process Management: principles and practice for strategic impact. Pearson Publishing, London, UK, 2006.

Teale, M. Management Decision Making. Financial Times Prentice Hall, London, UK, 2003.

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