Strategic directions of tourism development : the cases of Poland and Slovakia : scientific monograph

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STRATEGIC DIRECTIONS

O F TOURISM DEVELOPMENT

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Małgorzata Bednarczyk Andrej Malachovský Ewa Wszendybył-Skulska

STRATEGIC DIRECTIONS

O F TOURISM DEVELOPMENT

THE C A SES OF P O LAN D AND SLOVAKIA

S c ie n tific m on og ra p h

J a g i e l l o n i a n U n i v e r s i t y P r e s s

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Faculty of Management and Social Communication Jagiellonian University in Krakow

REVIEWERS

Prof. Ing. Marian Gúčik, PhD, Department of Tourism and Hospitality, Faculty of Economics, Matej Bel University, Banská Bystrica

Dr hab. Dagmara Lewicka, Faculty of Management, University of Science and Technology in Krakow

COVER DESIGN Agnieszka Winciorek

& Jagiellonian University Press

Kraków 2012

No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocoping and recording, or in any information storage or retrieval system, without permission in writing from the publishers

ISBN 978-83-233-3427-9

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1. The background for the European strategy for tourism development

Introduction

Tourism has become a significant factor in the global economy development.

Removing barriers and world trade liberalization brought economic growth and prosperity. Liberalization is also associated with freedom of movement and travel.

Globalization has become a trend of global economy. The effects of globalization in tourism are positive. On one hand, the process leads to strengthening global economic growth. On the other hand, it affects small and medium-sized enterprises.

Small and medium-sized enterprises are typical for the tourism sector. Creating a common product and its successful sale to the western European tourism market is an example of effective application of the strategic management instruments in the tourism sector. Short-term development in the tourism sector in Slovakia after the 1990s did not ensure competitiveness. Today, we can confidently say that over- coming the gap in the tourism sector will require radical solutions and significant changes in financing the tourism sector.

Long-term development of the tourism sector in Poland does not mean the stability of competitiveness of the Polish tourism sector in the significantly changing global tourism market. It is necessary to monitor the potential of the sector and to introduce innovations.

Slovakia, in comparison with the Czech Republic, Poland and Hungary, has gained an insufficient income from tourism. The share of tourism in the GDP is comparatively low. Application of strategic management instruments is a successful trend in the tourism sector. The cooperation between private and public sector is a prerequisite for the success of both Slovakia and Poland in the global tourism market.

For many years now Europe has been the most popular destination in the world.

In 2010 alone, it was visited by 476.6 million travellers. It does not mean, however, it is unbeatable as for the last twenty years Asian and Pacific countries have become their greatest competitors. In 2010, travelling to theese destinations constituted 22% of the total share of the global market of tourist arrivals and, according to the prognoses by UNWTO, the share is going to reach 30%. Taking these prognoses

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into account, Europe is taking steps to maintain the top slot s the favored tourist destination worldwide. Undoubtedly, the Treaty of Lisbon is a perfect opportunity to strengthen competiveness of the European tourism sector which, in turn, will contribute to the realization of the new Europe 2020 Strategy.

Tourism is playing a significant role in the development of many regions, being an essential source of incomes and employment for their inhabitants. What is more, for some of them it is necessary as it is an essential factor with increasing their competiveness. Thus, all the activities resulting from the European tourism policy largely influence the development of many regions as the tourism sector determines a pro-development impulse for the development of other sectors of the regional economy. However, European tourism policy requires adjustment to the specific conditions of particular European countries and regions. The prerequisite was the basis of the studies taken up by the authors of the work. The main goal of the study was to define major strategic directions of tourism development in Europe basing the research on two neighbourhood countries of the European Union, i.e. Poland and Slovakia.

Both countries represent similar legal conditionings. Both in Poland and in Slovakia there is no framework act which would be the basis for the complex support for the development of the tourism sector. In Poland there is a legal act on tourism services. It, however, is more of a sector nature, and does not cover every issue that allows for a complex development of the tourism sector. In both countries the institutional system which is responsible for tourism support operates in three levels (national, regional or local), and it is supported by the developing sector of non-governmental organizations. As for Poland, it seems to be slightly more developed owing to the activities of such organizations as Polish Tourism Organizations, Regional Tourism Organizations and Local Tourism Organizations. In Slovakia, the division of competencies in supporting the tourism sector is not fully regulated.

Tourism entities are quite frequently functioning in an uncoordinated way so that it hinders the development of the sector. The lack of cooperation causes a lack of coherent and systematic marketing activities between the local and regional entities. Both Poland and Slovakia should prepare the national strategies for tourism development with the time horizon of 2020. Strategic documents should also be prepared and applied in the region.

Micro, small and medium-sized enterprises (SMEs) are a dominant group of enterprises in both countries. Regarding the financial means in both of the analyzed countries, Poland has better possibilities of financing tourist projects. The means for project realization in Slovakia are eight times less, and are distributed mainly though the national programs.

In view of the varied conditions and bases of strategic directions of tourism development in the both countries, the differentiated but the most important (ac-

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Introduction

cording to the authors of this work) problems of competitiveness growth for the tourism sector, were presented separately for Poland and Slovakia. The mutual basis for the strategic directions of tourism development in both countries is the Europe 2020 development strategy. The first part of the strategy refers to the Euro- pean tourism policy included in the latest European Union development strategy, as well as to the methodological bases of modern monitoring of competitiveness of the tourism sector, particularly at the regional level. Other parts refer to the analyses of the two European countries, i.e. Poland and Slovakia in the context of building their competitive advantage in the context of realization of the European tourism policy.

The analysis of the Slovak tourism sector was oriented towards building a national strategy for tourism development. Chapter 1 of Part II describes theoretical bases of regional strategic management. Chapter 2 shows the analysis of creating the tourism strategy in Slovakia in the context of the European competitiveness and the elements of both the external and internal environment of the sector. The strengths and weaknesses and opportunities and threats for the Slovak tourism industry were also defined in the chapter. The above analyses pointed out the missions and strategic goals of tourism development in Slovakia, being a practical basis for the elaboration of the Tourism Development Strategy in Slovakia for the next couple of years.

Part III of the book refers to the Polish realities in the field of strategic tourism development. The key factor of strategic development of the tourism sector in Poland is its innovation. In Chapter I of this part, attention is paid to proper understanding of the nature of innovation, and the determinants that shape their development in the tourism sector are pointed out. The chapter finished with the types of most common innovation in the tourism sector. Chapter I of part III refers to the analysis of innovation in the tourism sector in Poland and to its empirical verification based on the model of monitoring of competitiveness of the tourism industry between 2008 and 2010. Special attention is paid to the frequency of implementation of new offers to the market, which is the primary measure of innovation of enterprises and regions, and to the sources of innovation applied in the tourism sector. In other aspect, special attention is paid to the growing importance of employees, as well as to their influence on the increase in innovation. Therefore, not only the availability of competent and qualified personnel, but also possibilities of their development are analyzed.

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PART I

European directions of strategic

development of tourism

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1. The background for the European strategy for tourism development

Strategic tourism development in the European Union and rising its competitiveness in the global market constituted a cornerstone for creation of common action frames for all member states with regard to creation of European tourism policy. In communication from the European Commission from 2006 “A renewed EU Tourism Policy: To- wards a stronger partnership for European Tourism” is discussed (COM (2006) 134).

In this document special attention was oriented toward supporting tourism enterprises’

competitiveness and creation of conditions for their development. Another important point was supporting cooperation between member states through exchange of best practices. The common policy for development of the European tourism sector has been encompassed in the most important strategic documents of the European Union.

They constitute the basic formal frames for practical actions on each and every level of tourism management in UE member states, taking into consideration their cultural specificity, organizational differentiation, potential and competencies.

1.1. Tourism in the Europe 2020 strategy

On 26 March 2010, the European Council agreed on the key elements of the new strategy named Europe 2020 – A strategy for smart, sustainable and inclusive growth.

The rules of the new strategy sum up the European model of social market economy with a strong environmental dimension. The strategy elements were formally adopted on 17 June 2010.

The strategy of UE development covers 5 agreed strategic goals: investment in R&D, education, energy—climate change, employment rate and reduction of poverty and social exclusion. All targets should refer to growth, employment and increase of UE competitiveness. These are:

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To raise the employment rate of the population aged 20–64 from the current – 69% to at least 75%.

To achieve the target of investing 3% of GDP in

– R&D in particular by im-

proving the conditions for R&D investment by the private sector, and develop a new indicator to track innovation.

To reduce

– greenhouse gas emissions by at least 20% compared to 1990 levels or by 30% if the conditions are right, increase the share of renewable energy in final energy consumption to 20%, and achieve a 20% increase in energy efficiency.

To reduce the share of early school leavers to 10% from the current 15% and – increase the share of the population aged 30–34 having completed tertiary

from 31% to at least 40%.

To reduce the number of Europeans living below national poverty lines by – 25%, lifting 20 million people out of poverty.¹

The foundation for strategic development of the UE up to 2020 should be 3 priorities: smart growth based on knowledge and innovation, sustainable growth relying on more ecology- and competitiveness-oriented resource utilization, and growth supporting inclusion accompanied by labor markets transformation and poverty reduction. These, in turn, are broken down into the seven flagship initiatives, all of which can be referred to the European tourism sector. These are as following:

Innovation Union: to improve framework conditions and access to finance – for research and innovation so as to strengthen the innovation chain and boost levels of investment throughout the Union. With regard to tourism this flagship project aims at strengthening research and innovation in reception areas, in all the links of product and process innovation chains, involving rules of ecologic and energy-saving economy both in tourism business (ho- tels, gastronomy) as well as in households.

Youth on the move: to enhance the performance of the education systems – and to reinforce the international attractiveness of Europe’s higher educa-

tion. The idea of this initiative for the tourism sector is to provide support for improvement of higher education systems quality and their international significance.

A digital agenda for Europe: to speed up the roll-out of

– high-speed Internet

and reap the benefits of a digital single market for households and firms. In regard to tourism this initiative of UE foreshadows supporting the prolifera- tion of broadband Internet for tourist enterprises and for local communities in reception areas.

1 European Commission COM (2010) 353.

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Resource efficient Europe: to help decouple economic growth from the use – of resources, by decarburizing the economy, increasing the use of renewable sources, modernizing the transport sector and promoting energy efficiency.

This project aims at: making development of the tourism sector independent from degradation of natural environment, modernizing of transport and promoting of energy efficiency among tourist enterprises and households in tourism destinations.

An industrial policy for the globalization era: to improve the business envi- – ronment, especially for SMEs, and to support the development of a strong

and sustainable industrial base able to compete globally. This particular UE initiative confirms the key importance of SMEs in its’ economy, also in tourism sector, and aims at improving their business environment.

An agenda for new skills and jobs: to modernize

– labor markets by facilitating

labor mobility and the development of skills throughout the lifecycle with a view to increasing labor participation and better matching labor supply and demand. The next UE initiative can be related to tourism in the aspect of modernization of the tourism labor market through increasing mobility within each and every Union country, and supporting workforce competency development in accordance with the lifelong learning model.

European platform against poverty: to ensure social and territorial cohe- – sion such that the benefits of growth and jobs are widely shared and people experiencing poverty and social exclusion are enabled to live in dig- nity and take an active part in society. Tourism is a very effective area of realization of the UE poverty reduction initiatives, providing social and territorial cohesion. Tourism offers work for young people, as well as reti- rees, annuitants, for whom other labor markets are inaccessible. UE policy involves support for setting up tourism enterprises in regions with high unemployment rate, to enable their inhabitants to become actively involved in society.

All the above mentioned projects of the newly legislated UE development strategy Europe 2020 relate in a very particular way to European Tourism Sec- tor, encompassing 27 member states. They constitute a formal framework of the European policy and institutional actions within the common European tourism market. Setting up the precise and renewed policy may result in effective “increase competitiveness of the European tourism sector as well as creation of more and better work places through sustainable tourism growth in Europe as well as all over the world.”²

2 Zawistowska H., Turystyka w strukturach Unii Europejskiej, MSiT, Warszawa 2009.

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1.2. Institutional implementation of the Europe 2020 strategy

The strategy „EUROPE 2020”, which was prepared in March 2010, is a foundation for consolidation of the European tourism sector. On 14 April 2010 in Madrid, during the Spanish Presidency, the EU ministers responsible for tourism signed the Declaration of Madrid in wich they contained a number of recommenda- tions regarding the boulding and realisation of a consolidated European tourism policy.

The main aim of the European tourism policy is to stimulate competitiveness of the European tourism sector. With regard to this need, The European Commis- sion adopted its Communication COM (2010)352, which defined current EU-level activities, that should focus around four pillars:

Stimulating competitiveness in the European tourism sector.

1. Promoting the development of sustainable, responsible and high-quality 2. tourism.

Maximising the potential of EU financial policies and instruments for de- 3. veloping tourism.

Consolidating the image and profile of Europe as a collection of sustainable 4. and high-quality destinations.

The stances of tourism ministers of all UE member countries – outlined in the strategy Europe 2020 and confirmed by Declaration of Madrid, as well as the rules of cohesive European tourism policy specified in recommendation of the European Commission – will remain a political framework only, unless they will find confirmation in institutional, practical actions of all administrative bodies on different levels of administration of the UE as well as ones of individual member states.

Institutional actions stimulating rise of European tourism competitiveness are implemented mainly by the Council of the European Union, called also the Coun- cil of Ministers,³ but also its’ unit Competitiveness Council (COMPET), which is chaired by an appropriate minister of the member state exercising Presidency in the relevant period. Presidency, so presiding over the Council of the European Union was defined in a group model, the so-called trio formula. The trio-formula means that three member states consecutively preside over the Council for 6 month period each, and they together set goals and priorities reflecting the scope and sequence laid down in the UE calendar up to the year 2020. The beginning of the

3 http://www.consilium.europa.eu [2012.06.02].

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actual strategy Europe 2020 implementation, together with the necessary reforms fall into the period of among others Polish Presidency in the UE Council. In July 2011 Poland, as the first and the biggest country in the trio group had taken the chair of the Council of the European Union and it held it till the end of December 2011. The next 6 months Denmark presided over the Council, and then – Cyprus.

All together the Presidency lasted 18 months till the end of 2012.

The state presiding over the Council takes particular organizational, initiating, coordinating, representative and mediating actions. One of the most important tasks of Polish presidency was initiating debate over a new UE budget for the years 2014–2020 and solving the critical financial situation of Greece as well as the whole Euro zone.

During the Polish Presidency period, the institutional implementation of the strategy Europe 2020 in the area of tourism was, realizes by the Polish minister of Sport and Tourism. With regard to this assignment since 1 July 2011 he has held many meetings – both formal as well as informal – with his counterparts from the member states, actively co-participating in the creation of the policy as well as organization and execution of actual actions oriented toward solving tourism sector problems. One of the more important events organized by Poland was the European Tourism Forum 2011. It took place between 5 and 7 of October in Cracow with participation of the directorship of UNWTO and OECD, Centre for Entrepreneurship, SMEs and Local Development. The main theme of the Forum was “Stimulating competitiveness in the European Tourism sector”. Conclusions drawn from the respective debates covered the most important directions of UE tourism sector development in the next few years. In particular, they referred to the following fields:

Supporting tourism business. Tourism sector, consisting mostly of SMPs, 1. resisted the economic crisis in Europe in 2007–2009. Support for the sector should comprise decreasing of taxes and administrative barriers, training of workforce, service quality enhancement and intensive promotion of brand Europa.⁴

Support for European tourism flow. Europe is the most important region of 2. tourist reception in the world tourism. The support should encompass: mak-

ing visa procedures for non-EU residents more flexible, expanding cultural trails, organising mass events, developing new forms of tourism: congress, business, health, and agrotourism.⁵

Improvement of innovativeness in tourism.

3. ⁶

4 Fidanza C., Europe, the world’s No 1 Tourism Destination, ETF, Krakow 2011, Poland

5 Ibidem.

6 Palmer R., Improvement of innovativeness in tourism, ETF, Krakow 2011, Poland.

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Integrating actions of all tourism supporting institutions on European, 4. national, regional and local level as well as active creation of ICT platform

for tourism.⁷

Improvement of the monitoring level of tourists – consumers and statistics 5. for tourism as well.⁸

The European Tourism Forum was the platform for discussions and proposals for different European and national institutions within the scope of realization of the most important objectives accepted in frames of the European tourism policy.

The EFT 2011 has dedicated to the theme „Stimulating competitiveness in the European Tourism Sector”. It represented an important step toward the implementation of the Commission Communication and particularly the tasks outlined in the implementation plan which was the core issue of the ETF 2010.

The main topics of discussion was “Consolidating the socio-economic knowledge base for tourism” and “Developing innovation and ICT in tourism”. Key issues were:

role of domestic tourism;

– increasing complexity of tourism demand and monitoring “new tourists”;

– the importance of practical data for tourism sector;

– the importance of regional/local destination level;

– developing innovation and ICT in tourism.

–Poland presided over the UE Council in a very difficult period. The negative effects of the economic and financial crisis in selected euro area countries, political crisis in many countries of the Mediterranean Basin, together with outbreaks in Greece have intensified. Due to the vernal political maelstroms in Egypt, Tunisia, Morocco called “the Arab Spring” in 2011 there was observed a significant rise in incoming tourism in Spain and France, but also in Italy, Bulgaria, Croatia, Cyprus, and Greece.⁹ During the period of the Polish presidency in the Council of the UE there was also seen the spectacular meltdown of the Greek public finances and a need to solve problems of the whole euro area. For the moment, it is impossible to assess their long-term effects on the European tourism sector.

7 Gawroński J., Integrating actions of all tourism supporting institutions on European, national, regional and local level as well as active creation of ICT platform for tourism, ETF, Krakow 2011, Poland.

8 Dziedzic E., Consumer Attitudes and Tourism Satellite Accounts: The Polish Experience, ETF, Krakow 2011, Poland.

9 http://www. tourism-review.pl [2012.05.23].

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1.3. European Tourism Sector

In the strategy Europe 2020 the tourism sector is a very important pillar of the European Union strategic development. The sector has been conceded by UE as a main stimulus of the European growth.¹⁰ It includes 1.8 m enterprises, mainly small and medium ones, employs 5.2% of the total workforce, what stands for 9.7 m jobs, especially for young people. The tourism sector produces 5% GDP of the European Union, and this share is still set to rise. Tourism is the third most important field of UE economy – after trade and construction. Tourism accounts also supporting sectors, like: transport, culture, construction and distribution, the results of which further increase the share of tourism in the EU GDP up to 10%, which corresponds to 12% of the total jobs number.

The European Union is the most popular tourism destination in the global tourism market. In 2008 its’ territory was visited by 370 m from all around the world, which corresponds to 40% of the total number of tourist arrivals in global scale.¹¹ Its significant is still rising in importance as a fraction of that flow is generated by tourists from BRIC countries (Brazil, Russia, India, China). Revenue from tourism brought ca. 266 billion euros out of which 75 billion was generated by non-UE residents.¹² That is why it is assumed that BRIC states are a very important region for incoming European tourism.

As a result of the previously mentioned indicators, and their positive changes, the European tourism sector has been acknowledged as the main stimulus for Eu- ropean growth and a rise of employment, which that result in economic and social development and integration. In strategic UE documents tourism is also regarded as playing a more and more important role in everyday life of European citizens, who travel for pleasure as well as business. What is more, tourism is strategic importance is revealed also in its’ importance for creating an image of Europe in the world.

The European tourism policy, defined in strategic UE documents, and specified in the last debates of the European Tourism Forum 2011, requires adaptations for the specific conditions of particular European states and regions. It means that all member states can prepare their own strategies for socio-economic growth, including the in tourism sector. In Poland assumptions for the new strategy of socio-economic development till 2020 were formulated in the so-called Polish Strategy 2020. All the referring specifications for the level of regions – voivodeships are at the final stage of formal decision processes at the boards of voivodeships’ self-government. For

10 Announcement of the European Commission for UE Parliament, July, Brussels 2010.

11 Barometer UNWTO, 2010.

12 Data refer to the year 2008, Eurostat, 23/2009.

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example, in October 2011 the board of Malopolska voivodeship adopted a regional strategy Małopolska 2020 where the tourism sector was included indirectly.

The legislated strategic documents constitute a political and formal framework for practical actions of the public and social sector in Poland (on voivodeship level) with regard to the creation of an environment for regional tourism and tourism business, with the aim of stimulating competitiveness of regional tourist products in the global tourism market.

Yet in management practice even the best quality strategy of the tourism development will not stimulate competitiveness of tourism sector, unless it is placed within the environment of a particular state or region, based on the systematic monitoring of the actual potential of this sector. After all the European tourism sector functions in the turbulent conditions of the global tourism market.

1.4. Model of monitoring of the strategy of development in the tourism sector d

The necessity of considering regionalization in formal and actual actions regarding strategic development of the European tourism sector appears to be obvious.

Generally speaking, the European tourism sector consists of diverse tourism sub- sectors of 27 UE member states. They differ in terms of culture, society, business, natural environment and historical traditions. However the country level is still not sufficiently homogenous for initiating effective practical actions aiming at improving tourism sector competitiveness, since tourist products are created and sold to tourists locally and regionally. Certainly, the tourist product of Spanish Catalonia vary from Norwegian Arctic Circle and industrial tourist products of the German Ruhr region, but also Polish Masuria, Cracow or Slovak terma and caves. There’s no doubt that research in the tourism sector competitiveness should encompass – besides the European tourism sector’s level – also national, or at least, regional levels (referring to NUTS 2 in Eurostat classification) in particular countries.

Current challenges facing contemporary European tourism imply an obvious question on a tourism sector competitive potential, which is necessary in order to survive the crisis.

Monitoring of the Polish tourism sector competitiveness has been systematically conducted since 2003 by the research team of the Department of Management in Tourism at the Jagiellonian University led by one of the authors of this book. Up

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to date research has been conducted in two stages covering the periods 2003–2005 and 2006–2009.¹³

The first stage monitoring research revealed, that in the period 2003–2006 tourism sector in Poland was characterized by the following features:¹⁴

Entrenched dominance of micro, small and medium tourism enterprises.

– Small correlation between the rise and the development of SMEs and support – from local public organizations.

Family roots of entrepreneurship in tourism.

– Independent development of private entrepreneurship in tourism.

– High share of grey market.

–Advantageous changes in the tourism business environment in Poland, such as actual inclusion of Poland into the structures of the European Inner Market (2004), activation of subsequent tranches of European funds, globalisation of markets and tourism enterprises’ strategies as well as revolutionary development of ICT caused the need for more detailed, analytical research of competitive potential of the tourism sector on the regional level (voivodeship level).

The next stage of the research in competitive potential was conducted between 2006 and 2009, though based on a modified model. The modification of model parameters resulted from important changes in every area of the tourism sector environment. In 2008 the Marketing strategy for Poland in the tourism sector was prepared; it constituted the basis for marketing support of the tourism sector.

What is more, from 2008 signals of the forthcoming economic crisis had emerged, a crisis, that could have influence on incoming tourist flow, and budgets of people in travel – both leisure and business ones. The dusk of the first decade of the 21^st century in Poland was marked by important social changes: increased mobility and migrations of Polish citizens. Incoming tourism flow was influenced by political and formal changes, like the Schengen agreement, resulting in the rise of barriers for travelers from post Soviet, non-EU countries. It was particularly important and painful for northern and eastern Poland. Furthermore dramatic changes referred also to the rise of the scale and scope of ICT applications in the tourism sector – especially those that are mobile and Internet based. Additionally, Poland experienced unpredictable catastrophic phenomena (destructive hurricanes and floods) which had negative effects on tourism in some voivodeships. The outlined aspects of the tourism sector environment’s changes proved the necessity for modifying the

13 Results of the first stage were published in a book entitled Competitiveness of small and medium enterprises on Polish tourism market [Bednarczyk M. (ed.), Przedsiębiorczość w gospodarce turystycznej opartej na wiedzy, Fundacja dla UJ, Kraków 2006] and they constituted a founda- tion for the research conducted in the period 2006–2009. [Bednarczyk M. (ed.), Zarządzanie konkurencyjnością biznesu turystycznego, CeDeWu, Warszawa 2011].

14 Bednarczyk M. (ed.), Przedsiębiorczość w gospodarce…

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concept of monitoring of the tourism sector competitive potential. From a broader perspective, we included the need for building a regional knowledge capital and increased importance of competences in SMEs with regard to innovation and ICT application. I adopted particular research model, structure of which is presented on fig. 1. The model was foundation for the research in which we monitored the tourism sector competitive potential in Poland in the second period (2006–2009).

The monitoring action was concentrated on small and medium enterprises, because they constitute the economic background and foundation of the tourism sector and – at the same time – the primary element of the regional tourism economy in Poland. However, the economy is not influenced by single and isolated business enterprises and objects of their environment. What counts here is the synergic effect of cooperation between all the regional organizations and institutions: tourist enterprises, public administration (both governmental and self-governmental), business self-government, and other entities from the business environment as well as the local community. It is the foundation for effective shaping and commerciali- zation of tourism products based on the local knowledge potential, which, in turns, results in an increase of competitiveness of the whole tourism region.

Fig. 1. The model of monitoring of the tourism sector competitive potential in a knowledge- -based economy

Source: Bednarczyk M.

KNOWLEDGE-BASED TOURISM ECONOMY

External competitiveness levers

Cooperation

Internal competitiveness levers

Local environment

of tourism business Management system

in tourism SME

Regional environment – financial support – workforce accessibility Macro environment

Competencies in tourism small and medium enterprises – knowledge management – innovativness

– ICT utilisation Inertia of public administration

and bussines self-government Competence gap in tourism SME

Effectiveness of strategic knowledge-based economy

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According to the presented model, the factors of SMEs’ competitiveness were grouped according to the location of source influencing the rise and fall of their competitiveness. As a result the two main groups of competitiveness levers were formed: internal and external ones. The external factors encompassing the quality of determinants that shaped local business environment were classified as external levers of SME competitiveness. The internal factors covering the competitive potential built within management systems were classified as the internal levers of SME competitiveness. Both the internal and external levers could contribute to the rise or fall of SMEs’ competitiveness. The measure of the external levers effectiveness was the inertia level of entities from the business environment. For simplification reason the most important ones were chosen for the model: public administration (both governmental and self-governmental) and business self-government. On the other hand the measure of the internal levers was a level of competency gap within SME.

Considering the specificity of SME management as well as imperative of their cooperation with local governmental administration, as well as with public and business self-government in the creation of tourist products based on local knowledge potential, 27 competitive factors were identified. They were clustered in 8 col- lective categories: 5 external and 3 internal ones. With regard to the external levers the measure was the environment entities inertia in the following areas: cooperation, co-creation, collaboration, access to qualified and competent workforce and to the external sources of financing. On the other hand the internal levers were measured by competency gap level in the following areas: knowledge management, innovativeness and ICT utilization. Evaluation of both – inertia and competency gap – was conducted in a certain scales within the lever’s subareas. The research instrumentarium consisted of: surveys, interviews, expert panels and desk research.

The detailed results were described in the book entitled Management of tourism business competitiveness within regions, edited by one of the authors book (M.

Bednarczyk).¹⁵

The proposed model for monitoring of the tourism sector competitive potential is universal in character i.e. it can be applied in the environment of different tourism sectors, where the sector structure is dominated by micro, small and medium enterprises.¹⁶ However the model should be adjusted to the particular business conditions by specifying the external levers i.e. conditions of the regional business environment, region features, and their scaling. As far as the internal levers are concerned, it seems necessary to conduct individual scaling of particular SME competencies.

15 Bednarczyk M. (ed.), Zarządzanie konkurencyjnością…

16 Definition of micro, small and medium enterprises is coherent with the UE recommendation, Commission Recommendation 2003/361/RC of 6 May 2003.

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The research results gathered with the use of the presented model can be applied in the first place by institutions of regional tourism business environment (governmental and self-governmental public administration and business self-government) for the sake of shaping regional tourism policy. The achieved results are also of high importance for tourism enterprises, as they may constitute a foundation for restructuring business competencies in contemporary conditions of the global tourism market.

Increase of competitiveness of European tourism in the global tourism market depends on the competitive potential of tourism SMEs and the effectiveness of cooperation platforms between them, the public sector and other stakeholders on European, country, regional or local level. Both dimensions supporting the development of sustainable and competitive European tourism are important and clearly visible on the formal and institutional level of the European Union.

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PART II

Strategic directions for tourism

development: a case of Slovakia

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1. Theoretical approaches of strategic

management research and its implementation in tourism

Tourism is a dynamic sector that requires cooperation of both the private and public sector. To this point arise the following questions: how to identify suitable ways to manage a sector that lacks a stable organisational structure and what management tools to apply. It is no longer questionable that management theories and strategic management theories are applicable not only in company management, but also in the management of various organisational entities with different legal forms and internal structures. Strategic management is an answer to the dynamically changing external environment. In the recent decades, the internal environment of all economic sectors has significantly changed, too. The development of strategic management has therefore gradually advanced from long-term planning to strategic planning and later to strategic thinking. In developed countries, this process has led to the transformation of business environment into the phase known as knowledge-based economy.

Positive outcomes of tourism policy in different countries in Europe and across the world demonstrate the successful application of strategic management in tourism theory and practice. Tourism policy has thus become a tool that enforces the application of strategic management with the foremost outcome – the strategy. Prior to strategy development are: mission formulation, objectives formulation, internal and external environment analysis, determination of strengths, weaknesses, threats and opportunities. These strategic management components are present in different documents of national or regional institutions with an influence on tourism management. Therefore, we have decided to pay particular attention to this field, in order to emphasize its factual significance in regard to a correct approach towards the specific strategy of tourism development.

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1.1. Schools of thoughts and content of strategic management

The theory of strategic management principles was formulated as an answer to the existing managerial problems of large companies. These were in need to ensure stability not only through traditional, well-established tools and methods, but also in a long-term perspective. Globalization and internationalization have vigorously influenced rapid and dynamic changes of the external environment and have led to the advancement of competition into superb competition. The necessity to establish stability by implementing strategic management tools has become the most significant reaction towards dramatic changes of the external environment.

The authors that have promoted the application of strategic management from the company sphere to various organisational structures and economic sectors include H. Ulrich, K. Bleicher, and Fk. Ferner. In their works, the term company has been replaced by more general terms: organisation, purpose-oriented social system or tourism organisation. In relation to tourism, strategic management is perceived as the determination of basic long-term organisation objectives, means of their accomplishment and allocation of resources inevitable for their execution.¹⁷

Strategic management in tourism is established on the national, regional, local (destination) and company level and it is a process that involves research of market conditions, customer needs and identification of wishes, determination of strengths and weaknesses, specification of social, political and legislative conditions of entrepreneurial activities, resource availability that might generate opportunities or threats.¹⁸ It can be stated that the strategic plan elaboration includes collecting relevant information from the organisation’s environment, determining mission, objectives, strategies and portfolio plan.

There is a crucial difference between short-term and long-term objectives in practice. Short-term oriented management, taimed at accomplishment of financial objectives results in the neglecting of long-term objectives. Such a managerial concept may lead to stagnation that may further progress to a closedown of the organisation.

The outcome of the strategic management application is the strategy of an organisation (a strategic plan). The perspective of its real fulfilment depends on the involvement of the individual elements in relation to the internal and external

17 Gúčik M. a kol., Krátky slovník cestovného ruchu, Ekonomická fakulta UMB, Banská Bystrica 2004, p. 127.

18 Donelly J.H., Gibson J.L., Ivanicevich J.M., Management, Grada, Praha, p. 23.

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1. Theoretical approaches of strategic management research and its implementation in tourism

environment. It must be taken into consideration what factors represent an influ- ential driving force in the sector.

Strategic management compared with strategic planning interconnects the strategy with its implementation.¹⁹ Assessment and control play a crucial role in strategic management, since the latter initiates potential alternations in the strategy implementation or even formulation, conditioned by radical changes of the environment. Strategic management puts demanding requirements on line managers who are responsible for strategy formulation, implementation and control.

Strategic management in comparison with strategic planning is rather a process with significant features such as continuity, compactness and internal unity of objectives. A strategic planning failure was mainly caused by underestimation of strategic procedures realization, organisation’s insufficient involvement in the strategy and rapid changes of the environment that had led to out-of-date strategies.

Strategic planning thus experienced a gradual loss of its credit.

Current perception of strategies is predominantly regarded as a process oriented approach that is rather informal, creative and without strict planning. Organisations with favourable internal environment have managed to generate strategies even without a formalised process or planning department within their structure. These strategies have become recognizable in the form of several interlinked decisions that recorded certain achievements.

Strategic management at the same time represents an active form of identifying gaps in the market that have the potential to gain a better competitive market share. The application of strategic management in tourism is based on a crucial finding that the origin of strategic management is closely related to the existence of system theories. Tourism system theory has become a dominant basis for the further theoretical research in tourism and for the tourism practice. Tourism has been significantly influenced by the existence of tourism system theory for over twenty five years. Strategic management is therefore solidly incorporated in the tourism theory fundamentals. Thus, further development, implementation and control of strategic management processes are necessary. According to H. Ulrich, general system theory is a formal science about structure, links and behaviour of a specific system.²⁰ The author perceives the system as a unity of various elements with mutual links or with the potential to establish mutual links. Further explana- tion of the term tourism system is provided by M. Gúčik.²¹

19 Papula, J., Strategický manažment, Ekonomická Univerzita, Bratislava 1993, p. 18.

20 Kaspar C., Management im Tourismus. Eine Grundlage für die Führung von Touristikunter- nehmungen und – organisationen, Paul Haupt, Bern 1995, p. 7.

21 Gúčik M. a kol., Krátky slovník…, p. 127.

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1.2. Strategic thinking, mission and objectives formulation

The formulation of strategic management mission, objectives and vision is preceded by the analysis of the internal and external environment, as mentioned before. This problem is thoroughly elaborated in management, strategic management, marketing and strategic marketing scientific literature. Because of this fact, we will not pay particular attention to this area of strategic management.

Strategic management and system theories are linked to strategic thinking that is in particular characterised by the freedom of entrepreneurial activity, pre- dominant interest in the maximisation of consumer’s personal utility and feasibility conditioned by rationality and ability to influence its environment. These elements should be actively present and dominant in the development strategy of domestic tourism in Slovakia. The consumer – the tourist – has an array of alternatives to choose from, simultaneously, strategy developers must be able to influence the external environment. M. Gúčik also draws attention to this fact, while emphasizing that it is possible to influence the impact of the external environment on tourism, providing the tourism system is united and its units cooperate.

The principles of strategic thinking outline the ways of analytic thinking that are intended to facilitate the strategy formulation which is supposed to assure prosperity even in uncertain conditions. It is advisable to perceive these principles coherently; otherwise, an isolated approach causes inefficiency. Major principles of strategic thinking are variation, continuity, system approach, interdisciplinarity, creativity, time management, feedback oriented thinking and risk taken into account. The variation principle expects the existence of strategy alternatives (variants) that will come in play if possible changes of the external environment oc- cur. The key concept of the continuity principle lies in the need of a permanent strategy formulation and correction. The system approach is based on the complex comprehension and assessment of individual effects. Interdisciplinarity involves a combination of different scientific disciplines. Creativity is a typical feature of strategic thinking and it is driven by innovative ideas. Time management develops the ability to focus on important tasks and to filter out the less important ones.

Feedback-oriented thinking is significant in regard to the processes and changes that appear inside the organisation and that influence its strategy, so that individual phases of the strategy cannot be considered as closed. In addition, Z. Souček perceives strategic thinking in terms of exact, intuitive and aggregate thinking.²²

22 Souček Z., Strategické řízení, SNTL/Alfa, Praha 1986, p. 20–50.

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The author emphasises the need to determine aggregate indicators of the strategy rather than detailed indicators typical for tactical and operational managing.

Š. Slávik perceives strategic thinking as the opposite of linear and mechanical thinking that tends to come up with repetitive and verified solutions and follow already proven patterns.²³ Based on the provided characteristics and definitions of strategic thinking, we may conclude that it is the contrary to the tendency of being satisfied with the objectives that rely on the safe past and neglect risks. Strategic thinking is understood as a continuous development of managerial thinking that has followed the phase of mechanical and intuitive thinking. Many managers confuse intuitive thinking with strategic thinking and make their decisions based on the assessment of an individual element or subsystem, which might not be particularly relevant to the functions of the system.

The existence of strategic thinking in a modern organisation is an inevitable precondition for the mission statement. Whether there is an essential need for the mission formulation for the organisation or any other social system to operate effectively, remains questionable. The mission should not be confused with the objectives, since they might be revealed neither to the public nor to employees.

The mission states the major principles, priorities and rules of the organisation that summarize its business manners. The role of the mission statement is emphasized in regard to domestic tourism in Slovakia that is insufficiently developed and lacks effort. Primary and secondary offer analyses result in the identification of the domestic tourism development potential. The significance of domestic tourism development has been neglected if not completely forgotten in the recent years.

Consequently, it is necessary to point out the basic interrelations and causes that represent impulses for the domestic tourism development. C. Bowman sees the importance of the mission statement in the determination of:

respected values and beliefs;

– field of action that covers the future needs to be satisfied, chosen markets – and ways of their needs’ satisfaction, product distribution technologies;

requirements of the stakeholders (employees, local residents, self-governing – units, etc.);

opinion on: growth, decentralization, financing, innovation, etc.

– ²⁴

The mission in strategic management should not merely be a summary of idle words or blank collocations, hardly comprehensible for a common reader. On the contrary, it is aimed at a broad audience of interested persons. The intention is to intermediate what are the needs our products (bundled services) satisfy.

Furthermore, target groups of inhabitants must be specified in order to be offered

23 Slávik Š., Strategický manažment, Ekonomická Univerzita, Bratislava 2005, p. 33.

24 Bowmann C., Strategický management, Grada, Praha 1996, p. 14.

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our products and values. The character of values is of significant importance, too.

A quality mission statement formulation might undoubtedly be a time consum- ing process, since it is expected to intermediate the purpose of the organisation’s existence and its activity ahead of time. It may take a long time and a glimpse of hesitation to set the mission and define the objectives if the organization lacks new products’ launching experience. On the contrary, experienced managers, with strategic thinking, skills and conditions for development tend to pay more attention to strategy formulation, implementation and control. Emphasizing the mission may partly substitute the internal and external analysis of the organization, which is sometimes a resource of time or demanding of information. Reasons stated in favour of the mission establishment involve in particular an occasional downturn of organization’s performance, efficiency fluctuations, competitors’ success that influences activities of the organization. Š. Slávik emphasizes the role of the mission in terms of its ability to differentiate the organization from other competitors, gain self-identity and uniqueness, and set the driving force.²⁵

A correct mission formulation serves as a navigator that keeps the organization from accepting incorrectly formulated objectives, ideas or projects that do not follow the mission.

M. Sedlák points out the fact that accurately set objectives are the basic precondition for success and stability of the organization.²⁶ Strategic objectives are recognizable in two forms, general and specific. General strategic objectives are mostly of qualitative character, outlining universal aspirations of the organization.

Specific strategic objectives (with reference to subject, time and quantity) can be controlled continuously. The first group includes e.g. organization’s growth, innovative objectives and dominant position attainment. The latter lists time related sales increase, growth of new products market share, growth of their share on the profit, concrete market share. Objectives should be assigned to all areas with the influence on the organization’s long-term performance and prosperity. The hierarchy of the objectives is based on their field of action and time span. A broadly formulated mission can be transformed into particular outcomes via objectives. Clearly stated objectives are the core for the evaluation of the mission accomplishment. Objectives represent a commitment for the management to achieve particular outcomes in concrete time. It is useful to involve subordinate managerial levels into objective creation in order to enhance their motivation. The responsibility for objectives’

conceptuality lies on the highest managerial level. Long-term and short term objective horizons are not set in compliance with exact criteria. The character of business activity and the conditions in the sector are of great importance here. The

25 Slávik Š., Strategický manažment, p. 36.

26 Sedlák M., Manažment, IURA EDITION, Bratislava 2009, p. 245.

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tendency nowadays is to shorten the planning horizons. The objective span depends on its field of action; the long term objective character is more evident in objectives with a greater field of action. Long-term objectives are set for a five-year span and more. They represent the basis for the decisions made in a short-term perspective with the potential to bring outcomes later. Short-term objectives are focused on immediate outcomes that help to achieve long-term objectives accomplishment.

The real content of objectives and their targeting are often a subject of disputes.

Ecological and social objectives are frequently emphasized by organizations; however, their accomplishment is conditioned by the profit gain. The profit gain ori- entation seems successful in a short-term perspective, it may, nevertheless, be the reason for stagnation and downturn related to the development of competitive environment.

1.3. Strategy formation

Verified models, encompassed in the strategic management theory are advised to be applied in the strategy formation. It is inevitable to know the variety of strategy formation approaches and fundamental strategies that are suitable to be applied in different business branches and sectors. With reference to the aim of this paper, we will deal with strategies that are applicable in tourism sector, which consists of a number of small organizations and with none of them having a significant market share. There is no leader in the market that would have a dominant impact on the competition principles. Accommodation services, hospitality services and other services provided in tourism are considered to be typical branches with applicable dispersed-branch oriented strategies. The strategy perception of the whole sector is crucial and supplements the strategy perception of individual business units. Š. Slávik states several reasons for the existence and persistence of dispersed branches:

low entry costs and minimal specialist knowledge barriers;

– variability of customers’ needs differing from region to region creates small – market segments and turns aside the role of a market cost leader and dif-

ferentiation bearer;

specialization of customers’ needs causes a small service scale;

– high transportation costs initiate regional, thus limited production;

– concentration of the ownership process is slow.

– ²⁷

27 Slávik Š., Strategický manažment, p. 146.

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A consolidated sector can be formed through the capital concentration, de- pending on various factors; most branches though remain dispersed for a long time. High intensity of competition slows down the process of dispersed sectors consolidation, despite the continuing capital concentration. These sectors represent natural recourses for entrepreneurs with insufficient capital, family businesses or starting individuals. The enhancement of quality standards that comply with the market potential is supported by the existence of the competition. The history of dispersed sectors development has proved that the strategy of chain formation is the one that has started to change the structure of dispersed sectors.²⁸ A typical feature of this strategy is the effect of fixed and variable costs reduction that makes it similar to cost leadership strategy.

J. Jirásek points out the following aspects, when selecting appropriate strategy variants: finance resources, management skills and feasibility of strategy alternatives.²⁹ The selection of an appropriate strategy model is a complex, yet difficult process. T.L. Wheelen and D.J. Hunger introduce twenty questions to be answered in order to select and create a suitable strategy model.³⁰ The most important ones concern harmony between strategy and mission, strategy consistency in terms of its internal and external environment, potential risk taken into account, harmony within organisation’s strategies, strategy and product life cycle relation, strategy vulnerability, strategy content in regard to new products’ benefits, strategy con- sequences referring to either competition imitation or unique ideas introduction, correct competition assessment, etc. An interesting strategy criterion in terms of domestic tourism development is the producers’ attempt to “export” goods and services abroad if they are unmarketable in their country. This strategy mostly proves to be fruitless.

Variant approach is according to J. Papula one of the dominant characteristics of the strategy formation process.³¹ It is a decision making process that consists of identifying ways how to achieve strategic objectives, follow the objectives accomplishment and follow the changes in the approach of the organisation, if the strategy fails. There are four basic strategy types recognizable in the practice: growth strategy, stabilization strategy, defensive strategy and combined strategy. The growth strategy is considered to be a progressive strategy type, characterized by market share growth and new markets’ entry. Concerning tourism, specific types of the

28 Souček Z., Ministrategie podniku – východisko dalšího rozvoje, Inštitút riadenia, Bratislava 1990, p. 25.

29 Jirásek J., Strategické řízení: proč a jak, „Moderní řízení“, roč. 29, 10/1994, p. 29–32, p. 27–29.

30 Wheelen T.L., Hunger D.J., Strategic Management and Business Policy, Addison Wesley, Mas- sachusetts 2005, p. 226–227.

31 Papula J., Strategický manažment, p. 120–121.

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growth strategy are applicable in this sector: fusion, integration (horizontal and vertical) or joint venture. The stabilization strategy represents the sustainment of the attained market position and the resistance to carry out changes if not necessary. Defensive strategy is carried out in areas such as consolidation or reduction in case of current development failure. The combined strategy combines two or more previously mentioned strategy types. The combination takes place if the objectives are accomplished in a long-term perspective and there is a need for their modification according to current conditions. The introduced strategies are applied even in regard to a well-established product-market matrix.

Market penetration strategy represents an attempt to improve the market position through existing products and customers. The marketing plan concept, as a potential component of this strategy, is supposed to be focused on customers’

persuasion to buy offered products in larger quantities. Hereby, it is possible to introduce price reductions, customer benefit-oriented promotion, larger assortment and better product accessibility. Likewise, new technology implementation enabling higher productivity can be involved. R.W. Griffin compares the market penetration strategy with the stabilization strategy and highlights its advantages in regard to sector’s and organisations’ product.³² This product has a better chance to reassert its position in the existing market, providing it is paid better attention. The author further compares this statement with the Boston consulting group model (BCG Matrix) and compares the situation to the product advancement from “question marks” to “cash cows”.

Market development strategy signifies the search of new customers for existing products. It is more than just a plain drift of an existing production a new market. Commonly, it is inevitable to pay attention to selling techniques, promotion and new selling styles. Investments aimed to acquire new market segments are frequently high and not all products and services are suitable to be offered to new target markets. Despite the high investments in the new target groups’ acquisition, these groups may not prove to be stable in terms of their purchasing behaviour and may incline to new products faster than original customers. Their inclination to buy a particular product or service can be weaker, despite their high purchasing power. This effect is the risk of an unpredictable customer. It is caused by the fact that a number of competitors can be active in the same market and their well ad- dressed business activities may easily reverse motivation and purchasing behaviour of the acquired customer.

Product development strategy focuses on the search for new business activities.

All the effort, time and disposable assets are invested in the products creation.

We distinguish individual product, several products or a whole set of products.

32 Griffin R.W., Management, Houghton Mifflin Company, Boston 2012, p. 112.

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This strategy requires a significant amount of financial resources and can be a sign of:

innovativeness, aimed to overtake competitors;

a) an attempt to keep pace with competitors through introduction of identical b) products;

a delayed reaction referring to changes of the external environment.

c) None of the provided situations ensures the expected strategy outcomes, and despite the amount of investments, it may lead to at market position loss conditioned by an incorrect assessment of the situation.

Diversification strategy signifies a prosperous chance for the sector that is dependent on a sufficient amount of disposable resources and managers’ determination to significantly change the competitive position. Differentiation strategy comprises the creation of new products for new customers. On the one hand, it requires investments into development of products and on the other hand, the investments into the capturing of new markets. From an organizational and financial point of view, this is the most challenging strategy. A complete implementation of differentiation strategy may bring several market advantages but it can also lead to useless investments in financial and time in highly saturated markets. Foster argues that a wrong evaluation of opportunities and threats may cause confusion between differentiation strategy and combined strategy.³³ A deceptive implementation of strategic management principles occurs as an aftermath. It is important to underline that the above mentioned strategies are close thanks to several characteristics.

J. Papula focuses on the issue of differentiation strategy while analyzing the Ansoff´s product/market matrix, its differentiation and forms.³⁴ It can be further subdivided into three forms: concentric, horizontal and conglomerate diversification.

Concentric diversification consists of a completely new product for new markets while using technological and marketing synergy with the existing products. Con- centric diversification appears when an organization is active in at least two areas with common features. At the same time, these areas have to assure a synergic effect on the basis of exchange of common skills and sources. As a result, higher volumes of realization, lower costs or decrease of investment demands are attained.

Horizontal diversification means a search of increase sales while affecting regu- lar markets with new products. These new products may use current distribution channels or satisfy other demands of customers.

Conglomerate diversification introduces new products into new markets while these products do not belong to any product portfolio and the common features

33 Ibidem, p. 28.

34 Papula J., Strategický manažment, p. 129–131.

Strategic directions of tourism development : the cases of Poland and Slovakia : scientific monograph

STRATEGIC DIRECTIONS

O F TOURISM DEVELOPMENT

Małgorzata Bednarczyk Andrej Malachovský Ewa Wszendybył-Skulska

STRATEGIC DIRECTIONS

O F TOURISM DEVELOPMENT

THE C A SES OF P O LAN D AND SLOVAKIA

S c ie n tific m on og ra p h

Table of contents

Introduction

PART I

European directions of strategic

development of tourism

1. The background for the European strategy for tourism development

1.1. Tourism in the Europe 2020 strategy

1.2. Institutional implementation of the Europe 2020 strategy

1.3. European Tourism Sector

1.4. Model of monitoring of the strategy of development in the tourism sector d

PART II

Strategic directions for tourism

development: a case of Slovakia

1. Theoretical approaches of strategic

management research and its implementation in tourism

1.1. Schools of thoughts and content of strategic management

1.2. Strategic thinking, mission and objectives formulation

1.3. Strategy formation