D e c i s i o n M a k i n g a t t h e S t r a t e g i c

a n d O p e r a t i o n a l L e v e l

Exercise: Innkeepers of America

OBJECTIVE

In this session, the concept of strategy is explored by

distinguishing it from operational issues.

Time: $20$ minutes

ADMINISTRATION

This session$$s exercise is an excellent opening exercise for the course. On

an individual basis, students typically do the reading and identify the

decisions as strategic or operational within ten minutes. This can be done

during class or before class.

Show the class a powerpoint slide of the decisions chart at the end of

the exericse. Once students have completed the exercise, begin class

discussion by displaying the chart and reviewing each of the decisions.

The reading provides the criteria for considering the decision to be

strategic or not. Of course, all the elements of the criteria may not apply in

every situation, but the more items that apply in a particular situation, the

stronger is the possibility that it is a strategic issue. Remind students that

another way to distinguish whether a decision is strategic is to consider

whether it will alter the company$$s position in the industry. Sometimes

students are unclear about why a decision is operational, especially when

it appears to have an effect on profit, when it affects the level of customer

service, and so on$.$ To clarify the distinction, use the college or university

as an example. $($See the discussion for Items $3,9,11,$ and $15$ below.$)$ The

suggested responses to the questions below focus on the firm being

repositioned in the industry as a result of the decision. If the decision does

not result in a repositioning of the firm, then it is considered an

operational decision $($O$).$ Some decisions, as noted, may be strategic $($S$)$ or

operational, depending on the interpretation.

It is important to emphasize that operational decisions are just as

critical to the success of the organization as strategic decisions. The

problem arises, however, when management does not make the necessary

strategic decisions that provide direction for the firm. A focus on

operational, day$-$to$-$day decisions, without the guidance that larger

Exercise: Innkeepers of America $2$

decisions provide, may result in department goal conflict. Also, this

distinction is important because, without strategic decisions being made

about overall direction, the firm may$$periodically$$be caught shifting

positions in the industry. Resources would then be wasted; and it is

difficult to create core competencies.

It is also important to point out to the students that sometimes, on the

face of it$,$ a decision may seem like an operational one $($see item $9$ below$)$

because it relates to a functional area. Nevertheless, applying the criteria

would lead management to a different view. Thus, even if managers work

in entry level or junior executive positions, an awareness of the

implications of their decisions for the strategy of the firm is important and

leads to the $$general management$$ perspective$$a learning objective in

most capstone strategy courses.

$\_\_1.$ Innkeepers of America$$s position in the economy segment of the

lodging industry.

$\_2.$ Locating properties next to a restaurant rather than have food and

beverage in$-$house.

$\_\_3.$ Price of rooms lowered further to meet competition.

$\_\_4.$ New advertising campaign with discount coupons for weekend

stays.

$\_\_5.$ Three new customer service positions.

$\_6.$ Shares of company stock issued for employee bonuses.

$\_\_7.$ Providing continental breakfast in the lobby.

$\_\_8.$ Room service $($for continental breakfast only$).$

$\_\_9.$ Computerized reservation system.

$\_10.$ Training program for front$-$desk employees.

$\_\_11.$ Web site where reservations can be booked online.

$\_\_12.$ New hotel properties built with additional features to appeal to an

upscale market.

$\_\_\_13.$ Merger with Economy Lodge, Inc.

$\_\_14.$ Rewrite mission statement.

Exercise: Innkeepers of America $3$

$\_\_15.$ Contracting cleaning and landscaping services.