Strategic positioning of family businesses

This project was carried out in cooperation with the MCI Family Business Center and the Leopold Franzens University of Innsbruck.

Background

Due to their size, small-structured family businesses in the tourism industry face challenges and disadvantages in an increasingly changing and saturated market, which makes a clear strategic orientation essential (Kelliher & Reinl, 2009; Peters, 2001). An intensive examination of one's own strategic orientation therefore brings significant competitive advantages over the competition (Aldehayyat, Al Khattab, & Anchor, 2011; Chrisman, Sharma, Steier, & Chua, 2013; Chua, Chrisman, & Sharma, 1999; Sharma, Chrisman, & Chua, 1997).

Objective

The aim of the project is to conduct a baseline study on the status quo of the strategic positioning of family businesses in tourism, to analyze their problem areas and to create a portfolio of strategic options for family businesses in tourism. Based on the problem areas, solutions for family-run Tyrolean tourism businesses are to be developed and published in the form of recommendations for action. These guidelines are intended to sensitize family businesses to the necessity of strategic planning and to demonstrate hands-on measures on how a strategic orientation can be achieved. In this way, the project aims to contribute to strengthening the competitiveness of family-run tourism businesses in Tyrol.

Central questions

• What is the status quo in family-run tourism businesses in terms of positioning and competitive strategy?
• What strategic options are there for family-run tourism businesses with regard to their competitive strategy?

Procedure

Both quantitative and qualitative methods were chosen to answer the research question and the recommendations for action in this project. This resulted in a mix of methods consisting of questionnaires, guided interviews and focus groups. A total of 119 companies in eight Tyrolean regions were surveyed between May 2017 and October 2018. The participating TVB regions were Pillerseetal, Vorderes Zillertal, Hall-Wattens, Tiroler Oberland, Paznaun-Ischgl, Achensee, Innsbruck and its vacation villages and Wilder Kaiser.

The results

Excerpts from the results:

The strategic positioning

• The strategic watch is mostly set in the direction of the basic provider at the standard price and quality leadership, while the high-price and niche segments are less pronounced.
• The companies believe that competition within the sector is increasing, while the negotiating power of customers and suppliers and the threat from substitutes and new entrants are perceived as remaining the same.

Qualitative survey

• The family is mostly perceived as a strength that provides support and conveys values, whereby a good work-life balance and succession planning represent a challenge.
• The companies recognize weaknesses in the area of marketing, while the online presence of the companies is very different. At the destination level, destination development plays a key role, with the main risks identified being the death of localities, price dumping in the region and external environmental influences.

Socio-emotional prosperity

• Good social relationships are of central importance for entrepreneurs.
• Making joint decisions within the family is emphasized as very important by family businesses.

Familiness

• It is very important for family businesses to retain control and influence over the company. However, some family businesses are prepared to sell the company or hand it over to external parties if no successor can be found within the family.
• Family members do not have to achieve the same level of qualifications as non-family members. This indicates that family entrepreneurs tend to rely more on trusted individuals than on qualifications.
• In difficult times, passing on family values, history and the preservation of jobs is not as important to family businesses.

Conclusion

The study shows that planning efforts at company and destination level are essential.

The following specific recommendations for action are derived:

• Strategic planning at company level: on the one hand, this involves developing the range of products and resources (e.g. through specialization) and, on the other hand, the long-term marketing and social media strategy.
• Family level: succession planning based on a family constitution or well-planned, long-term external succession.
• Work-life balance to prevent illness and early succession planning to ensure sustainable success.
• Planning uncertainty reduces entrepreneurs' willingness to invest - support must be provided by the TVB and politicians.
• Price dumping: A targeted offer and modernization should be preferred to business expansion.
• Branding: The Tirol brand could bring advantages to smaller regions in particular.
• Marketing: Online in particular, there are many different opportunities for businesses to better communicate information and improve bookability for guests.
  bookability by guests.
• Destinations: Small businesses should also be allowed to experience equal opportunities in voting.

Literature

Aldehayyat, J. S., Al Khattab, A. A., & Anchor, J. R. (2011). The use of strategic planning tools and techniques by hotels in Jordan. Management Research Review, 34(4), 477-490. doi.org/10.1108/01409171111117898

Chrisman, J. J., Sharma, P., Steier, L. P., & Chua, J. H. (2013). The Influence of Family Goals, Governance, and Resources on Firm Outcomes. Entrepreneurship Theory and Practice, 37(6), 1249-1261. doi.org/10.1111/etap.12064

Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the Family Business by Behavior. Entrepreneurship Theory and Practice, 23(4), 19-39. doi.org/10.1177/104225879902300402

Kelliher, F., & Reinl, L. (2009). A resource-based view of micro-firm management practice.Journal of Small Business and Enterprise Development, 16(3), 521-532.

Peters, M. (2001). Growth and internationalization: Survival opportunities for small and medium-sized tourism enterprises. Management and Corporate Culture: Vol. 6. Vienna: Linde.

Sharma, P., Chrisman, J. J., & Chua, J. H. (1997). Strategic Management of the Family Business: Past Research and Future Challenges. Family Business Review, 10(1), 1-35. doi.org/10.1111/j.1741-6248.1997.00001.x