Introduction
The events such as globalization and technology development have increased the competition in every business segment and thus managers in organizations need to devise innovative practices so as to develop the ability to manage business processes effectively and predict the future trends (Goll & Rasheed, 1997). The top management in business organizations are involved in the strategic decision making that are primarily related to the long term goals of the organization. Uncertainty and unpredictability is a common characteristic of strategic business decision making (Eisenhardt, 1997). It is a challenge for the top management to seek solutions and business tools that enhance the predictive ability of the managers in business decisions and increase the accuracy of the business decisions.
Like any other industry, a lot of uncertainty exists in the hospitality industry of UAE. A lot of uncertainty is involved in view of the economic developments in the Middle East region and the impact of the various political, social, economic and technological factors can be ascertained on the development and growth of the hotel industry in the region .
Strategic decision making by top Management
Strategic planning is a complex process. Uncertainty substantially increases the complexity of the strategic planning process(Oracle, 2008). Organizations that are successful in devising ways to deal with uncertainty thus have higher competitive and strategic advantage with others that are unable to manage uncertainty in the business decision making (Eisenhardt & Zbaracki, 1992).
Major changes in the business environment in the 21st century such as advancement of technology, demographic changes of the workforce, changing customer preferences and expectations, flattening of organisation structures, demands changes in the way businesses are conducted (Prahlad, 1995). Managers need to deal with these contents because few companies carry out a quality job coming up with buyers’ preferences as well as content strategies. Through the utilisation of crystal ball, they are able to focus the employees’ energy in pursuing the best alternatives. For instance, a sales manager can use predictive lead scoring to make certain that every prospect a sales representative decision is a good fit for the service. Since the hospitality industry is founded on customer management and quality service delivery, the managers need to rate the actual performance of all the aspects of the organization, such as roles, assignments, personnel, and tasks (Goll & Rasheed, 1997).
There are various aspects that are connected with managing a successful business. Since managers are considered as risk takers, most organizations are seeking for new ways to improve profitability and productivity. As a result, study is aimed at determining the impact of crystal ball (effective forecasting and predicting) on the performance of top managers and it affects. A lot has been written about the factors that affect ways in which managers run their organizations. Bednarz (2014), for instance, points out that looking into the crystal ball and planning the organization’s future are considered as the most difficult things managers can face. A smart manager will invest the time needed to formulate the solutions for the problem at hand based on past performace and future predictions and forecasts.
Application of decision making tools and software enable organizations to better manage uncertainty in the business environment through business intelligence, financial planning and predictive modelling tool based on forcasting and prediction approach (Oracle, 2008). These tools help organizations to take good decisions. Managers need to develop an understanding of the past trends in order to anticipate the future effectively (Eisenhardt, 1997).
Figure 2 Understanding the past can help model the future (Oracle, 2008)
In order for the business decision assumptions to be good assumptions, the organizations need to follow the following three steps. Assumptions should be realistic. The most influential assumptions are identified. The factors that can be controlled should be leveraged against those that cannot be controlled (Goll & Rasheed, 1997). The technique of predictive modelling enhances the strategic management process by increasing user confidence in the predictive analytics, integrated modelling process and flexible reporting
Effect of crystal ball (effective forecasting and predicting) on operational and financial performance
Risk Analysis: Forecasting, predictive modelling, simulation and optimization can help in analyze different scenarios and predict the future outcomes for organizations and thus identify the risk factors in the order of their importance (Eisenhardt & Zbaracki, 1992).
Financial Performance Analysis: This also helps managers in the identification of factors that have an impact on the financial performance and helps the organizations in making sound business decisions that are based on a clear understanding of the variables that affect the business (Eisenhardt, 1997). Streamlining their planning, budgeting and reporting processes based on the forecasting analysis improves their business performance by enhancing the operational aspects of the business (Goll & Rasheed, 1997).
Relationship between resource utilization and crystal ball (effective forecasting and predicting)
It is important that the organisations focus on maximum utilization og their resources to ensure higher returns on investment. The effective resource utilization includes m,aximum use of human resources, machinery, equipment, time, schedules and financial resources (Eisenhardt & Zbaracki, 1992). Use of crystal ball can help in effective evaluation of bottlenecks or problems that occurred in the past or might occur in future and effectively make plans to overcome the issues.
Economy of UAE
UAE has been performing well on its economic front for the year 2014 and its performance is expected to improve over the next few years. The participation of the country in the upcoming trade expo in the year 2020 is expected to further boost the hospitality industry in the country.
Figure 1 Economic Performance of UAE
Hotel Industry of UAE
The UAE hotel industry has displayed a strong performance in the third quarter of 2014 as it has can occupancy rate of nearly 100 percent in the hotels and the profitability of the hotels is quite high . The hotel brands such as Marriott Hotel are launching expansion plans to cater to the high demand and profitability through the growth in visitors in the coming years.
According to the World Travel and Tourism Council (WTTC) calculations, the investments in the entire tourism industry have increased from 10.3 billion in 2010 to 15.7 billion USD in the year 2013 in the Gulf Cooperation Council (GCC) region . Saudi Arabia is the leading investor in the region with an investment of 6.7 billion dollars in 2013 followed by UAE with an investment of 5.7 billion dollars in the region . UAE is expected to become the largest investor in the region by the year end 2016 . The 2020/2021 Dubai held World Exposition (Expo) shall strengthen the positon of UAE as a leading tourist destination in the world. The region targets as many as 20 million hotel requests by the year 2020. Number of hotel guests in the UAE has reached 11 million in the year 2013 . In comparison to Dubai, the hotel sector in Abu Dhabi is smaller and less dynamic. The number of tourists in Abu Dhabi have increased in 2013 by 18 percent to 2.8 million and according to the latest estimates by Abu Dhabi Tourism and Cultural Authority, the hotel occupancy has increased by 14 percent .
Tourism Sector in Abu Dhabi
The tourism sector in Abu Dhabi is expected to reach a growth rate of 15 percent in the year 2014 and attract nearly 3.2 million tourists from all over the world .
Application of effective forecasting and predicting in the Hospitality Industry
It has been a challenging proposition for the hoteliers to accurately predict the hotel demands in the view of uncertain international developments such as the outbreak of SARS, Ebola and terrorist events in the world that have a substantial impact on the travel industry . The individual hotel demand and performance may be affected by many factors and variables such as hotel location, quality, size, brand, level of service and pricing strategies . Crystal ball can help in the accurate prediction of future trends in the hospitality industry.
References
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