Differentiation:- Porter (1985) has defined that, " in a differentiation strategy, A firm seeks to be a unique in its industry along some dimensions that are widely valued by buyers. " In addition, Johnson. (2002) described, " A differentiation strategy seeks to Provide products or services unique or different from competitors in terms of dimensions widely valued by buyers. " Johnson..
(2002) defined that differentiation strategy is a potential idea to get more cost benefits, such as better market shares than competitors, moreover, hotels use this strategy by giving excellent service on little higher rates and become 'centre of excellence', the activities used under differentiation are improvements in products, and co-branding with other brands is an example of powerful promotional strategic intent for outsourcing. Focus on core business:- Core competencies can be defined as those exclusive ideas that give competitive advantage, motivate customers to buy one hotel's services rather than their competitors.
Hotel business like all others is divided into two activities:- core activities, and non-core activities, hotels want to do core activities by self whereas, procedures that are essential, but "non-core," become main considerations for outsourcing. Providing guests with quality rooms and front office guest services remains a hotel's main function. The F&B function, however, gains attention because of its importance to guest satisfaction and brand name of organization. ( Stacy . 1998 ) Primary needs Secondary needs
Matching customer needs to have more focus on core business. (Kandampully, J& Promsivapallop,P,2005). But, As defined in figure 1:4 Many hotels chose outsourcing for more focus on their core- business and try to outsource their insufficient expertise in non-core activities. some restaurant operators are extremely expertise in food and restaurant service, such as, national and international themes i. e. Benihana and Zen, which need high levels of knowledge that hotels would find exceptionally hard to get in rather than outsourcing.
As one restaurant operator stated: "being the leading oriental cuisine restaurant group we were the natural first choice for hotels looking for our particular type of product and service. " (Nigel. 2004) . Hotels can increase managerial attention to other tasks, this focus can improve results by let the hotels to be more effective, more innovative and more skilled in those activities. When the hotel focuses on its core competences, especially for the remaining employees, some positive improvements may emerge.
Focusing on core competences ensures that the job becomes more meaningful for the employees. (Bloat . 2009) Advantage to hotel :- Reduction in costs:- Lacey and Blumberg (2005) defined that outsourcers who know how to manage the process can enhance their hotel's performance and achieve a high level of satisfaction with the satisfied results. (cited by Bloat . 2009) Similarly, " buying in from a contractor generally means as good or better quality services at substantially less cost. It is common for saving of 23 to 30 percent to be achieved.
There are great potential benefits to be had, both in improved quality and lower costs. ( P. Reilly and P. Tamkin 1996) . Moreover, As bob Puccini says in one interview, "For most operators, hotel rooms are their business, restaurant is an under-valued asset but it completes the whole package and takes the hotel experience to high level. " Furthermore, Padron (2005) defined that hotels can improve organizational results by outsourcing the activities with low strategic values. (Rodri?? guez,E. and Padri?? n,R. 2005). As smith,(1998) has defined, hotels are using outsourcing for reducing costs.
Experimental research as well recommended that outsourcing organizations frequently attain cost advantages compared to in-house activities (Gilley et al. , 2004). It is generally supposed that outsourced companies can give the similar level of service at a lower cost than internal sectors. (Bloat, T. 2009). As Phelleps has defined, "whatever you are outsourcing, the key is to find a firm that understands you as a client and willing to partner with you to help reach your goals. " (Nancy, M, J. 2005). Competitive advantage: – Porter (1985) has defined that hotels use competitive strategy to gain the competitive advantage.
He has divided the rules of gaining competitive advantage in five parts known as five forces:- The strength of these five forces determines the ability of a hotel in the industry to earn on standard rate of return. This strategy help to gain profitable and sustainable position in the market. Maiga and Jacobs (2004) defined that Due to rapid changes in economy and business enviourment require senior management to take on strategies that focus on hotel's current success and invest in the activities that will promote hotel's competitive advantage for future success.
These days, Outsourcing has become a widely suggested technique to gain competitive advantage in market. On the other hand, Kistner, (2002) has described that most of the managers think that outsourcing is the important way to get competitive advantage in twenty first century. ( Cited by Bloat, T. 2009). Porter' s five forces for competition . ( Adapted from Porter, M (1985). Brand Extension :- Hotels can increase their turnover dramatically and operational profitability.
Knowles (1996) defined that International brand recognition help to reduce problems of Management expertise when expanding in a multicultural enviourment. Similarly, Walker (2007) defined that restaurant owner get profit by using the power of branding, in terms of, brand recognition viewpoint to product utilization. People associate a level of quality with branding and feel more comfortable purchasing a familiar brand. Branding increases the bargaining power of an organization. Strong brand name make it difficult for competitors to challenge its position in the market.
(Hankinson, 1993). Some more benefits for restaurant outsourcing are as defined by Embleton ( 1998) :- in Table 1:2. Disadvantage to hotel:- Mayer (1994) defines " in some cases, outsourcing is simply a matter of paying someone else to experience the pain of managing a dysfunctional IS function, rather than trying to figure out how to make the function healthy again . " Competitive Position:-Similarly P. Reily (1996) defined that sometimes hotels may lose their competitive position through outsourcing.
Outsourcing starts from under investment to cost cutting, (as defined in figure 1:3) lead to reduce capacity to innovate. The result is insufficient investment and gives knowledge and expertise to supplier who may able to seize the initiatives. This kind of reduction is dangerous for restaurant outsourcing although it is a non-core process of hotels. (P. Reily. 1996). Figure 1:3. Source:- IES. ( P. Reilly 1996) . Furthermore, Boone (1997) has defined that restaurants can have less flexibility and some limits such as: room service, banquets.
Some restaurants think to get income on systematic a base which is impossible in hotels. Loss of Control: – Kakabadse,(2000) explains that outsourcing can lead to a loss of control of management of hotel in restaurant. Although, maintaining the control is always difficult whether an activity is outsourced or not, because control over employees is not equal as control on other outcomes such as : cost, productivity and quality. Furthermore, Smith and Smith (2001) defined that differentiation in hospitality is a possible difficulty to control.
If the restaurant is a part of hotel's own activities, it is possible to enhance more control, because of similarities with hotel's culture and ideas, Outsourcing restaurants, may mean losing pricing and promotional flexibility. This can be a significant factor, as many hotels' room pricing strategy includes breakfast provision such as : Travelodge hotels (U. K. ) . (Hemmington and King, 2000). (Cited by Bloat,T. 2009). furthermore, Embleton ( 1998) has defined some disadvantage to hotels of outsourcing in figure:- 1:4 ( Embleton, P. and Wright, P 1998)
Advantage/ Disadvantage to restaurant:- Restaurant companies can expand their business by working with well known hotels. Boone (1997) has defined that it also helps restaurants to increase their sales from hotels to local levels. On the other hand, restaurants can have different disadvantages as well :- Boone (1997) has defined that it is difficult for restaurants to find proper site to fit with the hotel such as : customer availability and operating space. Some hotel operators may not have proper training to operate hotel restaurants which can damage the restaurants sales as it is a competitive entity.
(see appendix 2). Conclusion:- To sum up it can be defined that hotels should use restaurant outsourcing as a object to gain required results. Sporting activities can be outsourced to ensure that hotel's standard should be maintained and hotels can achieve their respective market position by joining brand name restaurants. Hotels should consider about the things such as : customer satisfaction , Market position of hotel and the restaurant to be outsourced, hotels and restaurants should repeatedly reassess and reorganize objectives so that they can get competitive advantage as well as profitable flexible service.