CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

As with other open system sectors, tourism and hospitality organizations commonly engage in strategic planning as a means of gaining competitive advantage in the face of an increasingly uncertain, dynamic and complex world (Harrison, 2003; Jogaratnam & Law, 2006). A core component of strategic planning is strategic (or SWOT) analysis, which entails the identification and assessment of internal strengths and weaknesses, as well as external opportunities and threats (Tribe, 2005). Superior performance is achieved, at least in principle, if the organization is able to align its internal environment (e.g. strategic direction, competitive strategies, allocation of resources, etc.) to respond optimally to these external opportunities and threats (Olsen & Roper, 1998). The external component, accordingly, is a critical aspect of strategic planning that is apprehended through a process of ‘environmental scanning’ (or ES) (Jogaratnam & Law, 2006), which Okumus (2004) defines as ‘the employment of systematic methods to monitor and forecast those external forces and developments that are not under the direct control of the organization or its industry’ (p. 124). A useful distinction in ES can be made between the ‘task environment’, or vendors, media, local communities, government agencies, customers and other groups that the organization regularly interacts with, and the ‘broad environment’, which encompasses the sociocultural, ecological, geopolitical, economic and technological contexts that the organization operates within. The distinction is important because organizations can exert at least some influence over the task environment but little or none over the broad environment, suggesting the respective utility of proactive and reactive organizational strategies (Harrison, 2003).

 The SWOT component of strategic planning has been criticized as typically being carried out in a non-analytical way that yields overly descriptive and general information insufficient to serve as an effective basis for subsequent action (Hill & Westbrook, 1997). While this suggests the need for analytical rigour, Okumus (2004) argues against formal ES procedures due to difficulties in defining and contending with the external environment, predicting the future, and collecting and accurately interpreting reliable and relevant data. Problems also exist in identifying factors as opportunities or threats (especially within the broad environment) and in structuring formal ES mechanisms ‘informally’ enough so as to not stifle creativity and maximum communication flows. Notwithstanding this paradox, a positive relationship between ES, strategy and organizational performance has been identified (Costa & Teare, 1996; Dev & Olsen, 1989), and even Okumus (2004) regards ES in at least some form as crucial for all hospitality and tourism organizations.

Studies on the relationship between performance and ES in the hospitality industry, conducted mainly during the late 1980s and early 1990s, have given rise to additional research streams focused on ES methods (Go & Vincent, 1995; Jogaratnam & Law, 2006; Kay, 2001; Pinto & Olsen, 1987; Wu, Costa, & Teare, 1998) and on the opportunities and threats identified by these exercises (Kim and Olsen, 1993; Murthy & Teare, 1994; Olsen, Murthy, & Teare, 1994; Simons & Namasivayam, 1999). Most of these empirical investigations rely on feedback from a sample of managers or top executives, in line with Okumus (2004) and Jogaratnam and Law (2006), who regard ES as the domain of senior management. The use of samples is also appropriate given the contention of Ashmos, Duchon, McDaniel, & Huonker (2002) that a collective approach produces better information when dealing with highly complex and uncertain external environments. However, the utility of outcomes as reported in the literature is constrained by the use of surveys, which yield the sort of vague and terse data criticized above by Hill and Westbrook (1997). Okumus (2004) argues that a deeper and more useful understanding of ES issues could result from employing hands-on qualitative data gathering methods such as in-depth face-to-face interviews and focus groups, either as a follow-up or lead-in to a survey. Alleged preferences for verbal communication and analysis even within larger hospitality organizations further support this qualitative approach (Mullins, 2001). Within the tourism literature more specifically, strategic analyses are uncommon and focused mainly on destinations such as Greece (Buhalis, 2001), Baoting, China (Wall, 2002) and the Western Negev region of Israel (Collins-Kreiner, 2006). Rather than synthesizing the input of relevant tourism managers, the authors themselves undertake the SWOT analysis using various primary and secondary sources of information. One exception to the destination-analysis-by-researcher pattern is Jogaratnam and Law (2006), who examined the ES practices of Hong Kong hotel and travel agency senior executives. No attempt, however, is made to differentiate the responses by sector, thereby limiting the utility of this research as an indicator of practices within the travel agency sector specifically.

1.2 STATEMENT OF RESEARCH PROBLEM

The effective absence of empirical strategic analysis research related to travel agencies and other tourism sectors such as attractions, tour operators, and cruise ships must be regarded as a serious gap in the literature given that the latter support the hospitality industry (travel agencies serving as intermediaries between consumers and hospitality providers), are important generators of jobs and revenue in their own right, and are similarly vulnerable to the exigencies of unpredictable external forces. This study partially rectifies this shortcoming by focusing on the conventional US-based travel agency sector, and specifically on the main contemporary opportunities and threats external to that sector as perceived by the senior executives of financially successful agencies.

1.3 AIM AND OBJECTIVES OF STUDY

The main aim of the research work is to examine the successful business owners’ perspectives on travel agency threats and opportunities in Lagos State. Other specific objectives of the study are:

1. to determine the effect of environmental scanning (ES) on the control of threats among travel agencies in Lagos State
2. to determine the relationship between ES and opportunities for the travel agencies in Lagos State
3. to investigate on the factors affecting the travel agencies in Nigeria
4. to determine the extent to which travel agencies have improved the hospitality and tourism sector of Nigeria
5. to proffer solution to the above stated problem

1.4 RESEARCH QUESTIONS

The study came up with research questions so as to ascertain the above stated objectives of the study. The research questions for the study are:

1. What is the effect of environmental scanning (ES) on the control of threats among travel agencies in Lagos State?
2. What is the relationship between ES and opportunities for the travel agencies in Lagos State?
3. What are the factors affecting the travel agencies in Nigeria?
4. To what extent has the travel agencies improved the hospitality and tourism sector of Nigeria?

1.5 STATEMENT OF RESEARCH HYPOTHESIS

Hypothesis 1

H0: there is no significant relationship between ES and opportunities for the travel agencies in Lagos State

H1: there is significant relationship between ES and opportunities for the travel agencies in Lagos State

Hypothesis 2

H0: environmental scanning (ES) has no significant effect on the control of threats among travel agencies in Lagos State

H1: environmental scanning (ES) has significant effect on the control of threats among travel agencies in Lagos State

1.6 SIGNIFICANCE OF STUDY

The study on the successful business owners’ perspectives on travel agency threats and opportunities in Lagos State will be of immense benefit to the entire business owners in Lagos State, the tourism and hospitality industry and other researchers that desire to carry out similar research on the above topic as the findings of the study will educate the entire population on the travel agencies in Nigeria, the threats and opportunities faced by the travel agencies in Nigeria. Finally the study will contribute to the body of existing literature and knowledge in this field of study and provide a basis for further research

1.7 SCOPE OF STUDY

The study on travel agency threats and opportunities: the perspective of successful business owners will be limited to 100 business owners in Lagos.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work

1.9 DEFINITION OF TERMS

ES: environmental scanning

Tourism: Tourism means people traveling for fun. It includes such activities as sightseeing and camping.

Resort: Places where many tourists stay are called "resorts.

Threats: a statement of an intention to inflict pain, injury, damage, or other hostile action on someone in retribution for something done or not done