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PURCHASING CONCEPT ON THE BUSINESS PERFORMANCE OF HOTEL

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND TO THE STUDY

The purchasing concept is an important management philosophy used in the operation of business today. But before this other business philosophizer such as the production and selling concepts. However with the change of circumstances and prefiguring competition in the business world the purchasing concept emerged and came into focus. As competition between  business geared up, it become imperative to turn attention  to customers needs and wants. The purchasing concept arose to change all other previous concepts. The purchasing concept holds than that the key to achieving hunting the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than, competitors.

The; purchasing concept is a management philosophy orientation or frame of mind which the marketer work  with it is based on a purchasing  focus, customer orientation  co-ordinated marketer works with it is based on ;a market  works with orientation co-ordinated purchasing and profitability (kotter 1997: 19-23) In this country today, many business organizations are established and they strive for the actualization of profit making objectives.  However, for any business organization to succeed, it must incorporate some elements of purchasing programme into its policies and programes. Therefore, for us to effectively appreciate purchasing concept on the business performance of Hotels services, it becomes imperative to us to understand firstly what purchasing concept on the business performance of Hotel service is all about.

Purchasing could be defined as the management process responsible for identifying, anticipating and satisfying customers requirements profitably. (The British Institute of Purchasing 1989:1) Purchasing could also be viewed as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others. (Kotler 1991:10) Services could be defined as any activity benefit or satisfaction that is offered for sale.  It is essentially intangible and may not necessarily result in the ownership of such business outlet.  Its production may or may not be tied to a physical product.

In a nutshell, hotel is a building where rooms and usually meals are provided for people in return for payment.  Moreover, quality halls and rooms suites are provided.  Such as swimming pools complete business centre, laundry services to mention a few.  Hotels in Nigeria offers important services and facilities such as lodging accommodation (presidential suite, executive suites and master bedroom).  Rooms services restaurant, bar, club houses, etc.  Recreational facilities such as swimming pools, Lawn tennis courts, garden park etc. On the other hand, restaurant is a place where meals are prepared, served and eaten.  Since well equipped restaurants have television sets, musical sets etc to keep the customers in relaxation mood, (same are of high capacity where you go and have what you want and leave).

The increased charges in the market sector have made it necessary for hotels to become more market oriented in the cause of rendering customers needs and wants as well as fulfilling their own organizational goals. Hotel purchasing therefore can be defined as the application of purchasing concept in the hotel industry so as to achieve more effective services to the customers.  There have been many changes and developments in the hotel industry over the past years.  Some of these changes reflects on the economic, political and social life of people.  (With others being consequence of technological and social changes) it was recently that hoteliers become more transformed and re-engineered to meet this present day trend in hotel management. 

Hotel industry are confronted with drastic competition to determine who will commend or win the customers patronage based on good oriented services.  In view of this any hotel wishing to survive in the present day competition should endeavour to provide good and result oriented services to its vast customers and as such creates better image of their organization.  This helps to boast the promotional activities of the company (to succeed in satisfying their customers and these could be those hotels that are prompt efficient and effective).

Meanwhile adequate and effective application of purchasing concepts by any organization in its operation is very vital to the successful existence of such organization such as Hotel cordial.  Since purchasing concepts is a commercial process that starts before production influences this and continuous inform of after sales services and long after the products have been sold and transferred to the customers.  Also purchasing concept is the business philosophy that focuses more on the customer satisfaction as against other concepts like the selling concepts or production/product concept.  It has many colourful expression like

“Purchasing need profitably”

“Funding wants and fulfill them”

“Love the customers not the product”

According to Kotler (1997:19) purchasing concept holds the key to achieving organizational goals, consists of being more effective than competitors in integrating purchasing activities towards customers needs effectively and efficiently without knowing their needs.  This will enable you to formulate strategies to apply.  The essence of this is to determine the needs and wants of customers. In planning purchasing strategies, it is important to understand service quality required of the perception customers. Hotels may appeal to one or more customers segments from among business travelers.  Each segment requires different level of services.  Hotel business as a tourist industry, renders services to travelers and customers to entrance their tourism needs.

1.2  STATEMENT OF THE PROBLEM

The Hotel Cordial Owerri is one of the leading hotels operating in the country now but it is no exaggeration to say that some hotels in Owerri are performing below expectation.  That is to say that they do not meet the required patronage by numerous customers and Hotel Cordial is not exception. One may be inclined to suggest that the reason for the low performance is non application of effective purchasing strategies.  Hotel cordial in an attempt to increase the rate of patronage by customers offers good services engages in promotional activities.  These promotional activities increase operating cost without increasing the profitability of the company. Moreso, the industry is now highly attractive and competitive.  There are a lot of big hotels in Owerri operating on the same strategy with Hotel Cordial.  The question now is how can this hotel improve its operation through effective purchasing strategies.  These and many others form the focus of this research work.

1.3  OBJECTIVE OF THE STUDY

The objective of the study refers to the goals or targets intended to be achieved by carrying out these research work.  These objectives are as follows:

To find out why Hotel Cordial is experiencing high percentage of customers patronage.

To find out what purchasing strategies Hotel Cordial is applying that attracts more customers.

To find out why Hotel Cordial is doing relatively well in creating awareness

To find out the distribution strategy used by Hotel Cordial Owerri.

To determine the impact of charges in Hotel Cordial on customers patronage.

To determine the impact of quality of service offered by Hotel Cordial on customer patronage.

To determine the impact of purchasing strategies used by Hotel Cordial on its operations.

To make recommendation on how to improve their purchasing operation.

1.4  HYPOTHESIS FORMULATION

In order to give focus to the study, the following hypothesis were formulated.

Ho:  The quality of services rendered by Hotel Cordial does not lead to increased customer patronage.

HI:   The quality of services rendered by Hotel Cordial leads to increased customer patronage.

Ho:  The charges of Hotel Cordial does not lead to increased customer patronages.

HI:   The charges of Hotel Cordial leads to increased customer patronages.

Ho:  Distribution Strategies adopted by Hotel Cordial do not lead to easy availability of its services.

HI:   Distribution Strategies adopted by Hotel Cordial leads to easy availability of its services.

Ho:  Promotional Strategies adopted by Hotel Cordial Owerri does not lead to increase in customer awareness.

HI:   Promotional Strategies adopted by Hotel Cordial Owerri leads to increase in customer awareness.

Ho:  Purchasing strategies adopted by Hotel Cordial impact negatively on the profit of the Hotel.

HI:   Purchasing strategies adopted by Hotel Cordial impact positively on their profit.

1.5  SCOPE OF THE STUDY

The research work was carried out at Hotel Cordial Owerri.  It focus on the purchasing concept on the business perforamnce of Hotel in Owerri metropolis

1.6  SIGNIFICANCE OF THE STUDY

However, the findings of this research are expected to contribute to the following:

It will be of great importance to other researchers on the related topic who may wish to use it.

It will provide basic knowledge to readers.

It will enable the researcher to know how to handle hotel purchasing in future.

It provides all needed vital information about Hotel Cordial Owerri.

Since every business enterprise like Hotel Cordial requires proper data or information for effective strategy to people present at the disposal of those concerned.

1.7  LIMITATION OF THE STUDY

The researcher experienced the problems of time and finance which was too short to do an exhaustive study.  Some customers decline to give answers to questions put to them by the researcher.  There was also the issue of screening which made it impossible for the researcher to collect all the required data from the management of Hotel Cordial Owerri.

1.8  DEFINITION OF TERMS

PURCHASING Purchasing could be defined as the management process responsible for identifying anticipating and satisfying customers requirement profitably (The British Institute of Purchasing (P.89:1) Purchasing could also be viewed as a social and managerial process by which individuals and groups obtain what they need and want through creating offering and exchange products of value with others (Kotler 1991:10).

HOTEL Hotel is a building where rooms and meals are prepared for the people and halls are booked and other necessary kitchen utensils are turned for use.

SERVICES Services could be defined as any activity, benefit or satisfaction that is offered for sale.  It is essentially intangible and odes not result in the ownership of anything.

PURCHASING CONCEPT Purchasing concept holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating, delivering and communicating customers value to its chosen target markets.  Purchasing concept rest on four (4) pillars target market, customers needs, integrated purchasing and profits customer satisfaction (Kotler 2000:10).

STRATEGIC FORMULATION Goals indicates what a business unit wants to achieve, strategy is a game place for getting there.  Every business must tailor a strategy for achieving its goals.  Consisting of a purchasing strategy and a compatible technology strategy and sourcing strategy.

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