SIT07 Tourism, Hospitality and Events Training Package V3.0 SITXMGT006A Establish and conduct business re lationships Learner guide Version 2

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1 SIT07 Tourism, Hospitality and Events Training Package V3.0 SITXMGT006A Establish and conduct business relationships Learner guide Version 2 Training and Education Support Industry Skills Unit Meadowbank Product Code: 5646

2 Acknowledgments TAFE NSW Training and Education Support Industry Skills Unit, Meadowbank would like to acknowledge the support and assistance of the following people in the production of this learner guide. Writers Johanna Visser Teacher, Travel and Tourism TAFE NSW Illawarra Institute Reviewer Karin Rule A/Manager Industry Teams TAFE NSW Training and Education Support, Industry Skills Unit Meadowbank Project Manager Margaret Heathcote A/Education Programs Manager, TAFE NSW Training and Education Support, Industry Skills Unit Meadowbank Enquiries Enquiries about this and other publications can be made to: Training and Education Support, Industry Skills Unit Meadowbank Level 3, Building J, See Street, MEADOWBANK NSW 2114 Tel: Fax: TAFE NSW (Training and Education Support, Industry Skills Unit Meadowbank) 2012 Copyright of this material is reserved to TAFE NSW Training and Education Support, Industry Skills Unit Meadowbank. Reproduction or transmittal in whole or in part, other than subject to the provisions of the Copyright Act, is prohibited without the written authority of TAFE NSW Training and Education Support, Industry Skills Unit Meadowbank. ISBN TAFE NSW (Training & Education Support, Industry Skills Unit Meadowbank) 2012

3 Table of contents Introduction... 7 Topic 1 Business relationships Defining a business relationship Establishing business relationships Communication skills and techniques Maintaining industry contacts Developing business relationships Utilising social occasions Gifts and other inducements Topic 2 Negotiation skills Conducting negotiations Factors affecting negotiations Preparing for negotiations Outcomes of negotiations Topic 3 Make formal business agreements Contracts Topic 4 Fostering and maintaining relationships Proactively seek, review and act Honouring agreements Adjustments to agreements Nurturing relationships Unit summary Glossary of terms Reference list Resource evaluation form TAFE NSW (Training & Education Support, Industry Skills Unit Meadowbank) 2012

4 Topic 1 Business relationships No business can survive without the goodwill that is developed through establishing mutually beneficial relationships between the organisation, customers and suppliers. It is impossible to work in the tourism, hospitality and events industry without possessing the ability to effectively establish a wide variety of business relationships in a variety of contexts, including our contemporary cultural environment. In this topic we will examine and discuss the building of trust and respect with the use of effective communication skills and how to identify and use the opportunities that arise to maintain regular contact with your customers and suppliers, thus ensuring the maintenance of business relationships. Business relationships What do you understand to be the meaning of the term business relationship? TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012 Page 11 of 60

5 Business relationships (continued) Now consider this term in the following ways. (a) Imagine yourself as a customer dealing with a retail travel agency what does it mean to you to have a good business relationship with this company? (b) You are the manager of a large hotel in the city. What does it mean for you to have a good business relationship with your various suppliers? What does it mean to have a good relationship with your distribution companies i.e. travel agents, tour wholesalers? (c) You are an events coordinator organising large events in regional areas. What does it mean to you to have good relationships with your suppliers and venues? Page 12 of 60 TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012

6 1.1 Defining a business relationship The essence in defining a business relationship is that it is one which is mutually beneficial. That is, both or all parties receive a similar range of benefits from the relationship. As in any business situation the tourism, hospitality and events industry seek to portray a positive, professional reputation and image amongst consumers, existing customers and the companies that they do business with, in order for them to make a profit and be successful. 1.2 Establishing business relationships Establishing business relationships requires the promotion of goodwill and trust between the organisation, its customers and its suppliers. Tourism, hospitality and events businesses interrelate with one another to provide a customer s experience. It is important for you to consider all the companies involved in the purchase and delivery of your services and the importance of developing a good business relationship with them. Developing good business relationships with other companies and organisations will provide many positive advantages to your business, which could be in the form of preferential commissions or prices, access to specialised goods and services and accreditation as a preferred product seller. The business relationships you have with the various suppliers and intermediaries you work with and the ones you may choose to work with in the future will result in: if you secure good rates from suppliers Your knowledge of the industry allows you to understand the significance of this. The better the rate/s you can negotiate the more attractively you can package the price for the customer and the greater the profit you make! Also your package will seem more attractive as opposed to your competitors. Suppliers will only offer good rates to businesses they have good business relationships with. Some suppliers will not even negotiate with organisations they consider unreliable and unprofessional. In their view, doing business with these companies will ultimately harm their own product s reputation and success. how quickly your business is dealt with in business arrangements Tourism, hospitality and events business environments can change drastically and suddenly. It is important for you to conduct business dealings with suppliers who respond to your requests for information, rates, specials, and promotions with a rapid turnaround. If your company does not have a good business relationship with suppliers, your priorities will seem of little significance to them. This attitude may ultimately harm your business viability and profitability. TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012 Page 13 of 60

7 how well intermediaries and suppliers promote you You know that preferred product agreements often dictate what tourism intermediaries recommend and sell to consumers. A company who promotes and recommends another with a poor business attitude and relationship with them would seem ridiculous, even regardless of the agreements entered into. The features of good business relationships already discussed tell you this. the long-term nature of your relationship Good business relationships are developed with a long-term view. You don t build trust, reliability and so on for short-term gain. Even if your business changes direction and does not negotiate with another, the relationship that has developed still needs to be maintained to preserve your business s reputation. Equally important are the relationships you build with your customers. Whilst they may not have the same type of structured business approach that a company has with its suppliers, the customer relationship is one of business, a fact that is often overlooked by service providers in the tourism, hospitality and events industry. Many consultants and service personnel do form close relationships with their customers but of the informal type that encourages a familiarity with the client. This is ok provided that the consultant never forgets their responsibility to do the best for the client at all times. Customers, clients and guests who purchase tourism, hospitality and events goods and services are purchasing often an expensive product, one that is intangible. They must rely on advice provided to them by sellers as to the quality and features of the product they are buying. Deciding which business to place their trust in is often a daunting activity for the customer. Customers will ultimately become loyal to a travel agent, hotel or hotel chain, airline or event manager once they have experienced positive outcomes and the reliability and professionalism of one or other business. Other factors such as price and appeal of the service are linked to their decision, but often businesses fail to consider the importance of developing goodwill and trust and a good relationship with their customers. Trust matters in many ways to a business. It affects customer loyalty, staff morale, the managing of diversity, staff turnover and profitability. Business researchers have identified five components of trust (Robbins et al, 2000). Integrity: honesty and truthfulness. Competence: technical and interpersonal knowledge and skills. Consistency: reliability, predictability and good judgement in handling situations. Loyalty: willingness to protect people and save face for them. Openness: willingness to share ideas and information freely. Page 14 of 60 TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012

8 There is also the issue of ethics in business. Ethics are said to be a system of moral values, often culturally based, that determine our perception of what is, and is not, acceptable behaviour. It is about professional standards and conduct and the ability and discipline to know the difference and to act upon it. There is often a great disparity in ethical standards between cultures. In business in some cultures it is expected that managers will look after their family and hire family members into the business even if they are not qualified or capable of delivering a competent work output. It is expected however that managers will show no favouritism and will hire the person best suited for an available position. Management ethics can be thought of as standards that are right or moral and which should be followed in all situations by every manager. However, managing to conduct all business relationships in an ethical manner is often challenged by competing tensions between the firms industry and customer obligations and interests. In Australia, relationships in business are carried out between organisations in quite a relaxed manner. There are guidelines which, if followed, will result in successful dealings whatever the cultural background and expectations of the participants. An appointment would be made with the client once you had established their name and contact details. This appointment could be arranged on the telephone but ought to be followed up with a confirmation fax or or letter. As you are initiating the meeting you would outline the objectives you have for it and how long you would require of the person s time (a meeting agenda should also be prepared). You would make sure you arrive on time at the location selected. You would dress in appropriate business clothing, such as a suit and well groomed. Begin your conversation in a formal manner addressing the other person in a respectful manner. The other person will indicate or give signals when and if a more informal environment is acceptable. The meeting would normally be held in a small conference or meeting room or the office of the client. You would be offered refreshments of some kind and carry out some small talk or friendly discussion before getting down to business. This might seem quite obvious to you but would this situation be the same if you were doing business with another cultural group? The answer to this question is probably, but not in all respects. Whilst the business world is seen as having no boundaries and it operates in a global economy, the way you conduct yourself, carry out business dealings and maintain relationships can vary enormously amongst even western cultures. It is crucial to business success that you remain informed of how businesses in other cultures carry out their business activities and what they expect from you. TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012 Page 15 of 60

9 This includes understanding: the way the culture thinks and reasons the cultural laws and rules, including religion and religious beliefs communication, including language, both body and verbal. Is English widely spoken? cultural sensitivity and intercultural communication their customs including: - manners - greetings and introductions - apology and respect - entertaining, eating and drinking etiquette - gift giving and receiving - the use of humour - women, men and relationships - business expectations. The above information can also apply to your interactions with customers however we add a number of other considerations to customer preferences. Service preferences, including service expectations, speed, and attitude. Accommodation preferences including room choice, attitudes towards cleanliness. Dining preferences, including type of cuisine, use of alcohol. Travel behaviour and interests - such as how busy the itinerary should be, how much leisure time to include One must not forget that because of the very nature of our industry, both the people within the industry and our customers come from many different countries and national, cultural and ethnic backgrounds. The building of business relationships will require a flexible approach and a knowledge and understanding of the perceptions, beliefs and behaviours of those with who we are dealing. Importantly, we also need to be very self-aware as we bring our own backgrounds, beliefs and attitudes to the process. In the tourism, hospitality and events industry we do have rules and guidelines in the form of legislation about fair treatment and the codes of ethics and conduct that have been developed by industry associations. Such rules and codes show us our obligations and assist us to keep our focus on meeting the expectations for all those with whom we have business relationships. Page 16 of 60 TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012

10 Code of ethics and professional conduct Identify four (4) tourism, hospitality and events industry associations. Name them below, advise whether or not they have a code of ethics and or professional conduct, summarise the code TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012 Page 17 of 60

11 Cultural research You are the Product Development Manager of an airline. You need to meet with the Product Development Manager from a Japanese Tour Operator. Conduct some research on dealing with the Japanese in business then briefly outline how you would: approach the person arrange a meeting dress behave during the meeting Would this vary if you were meeting a representative from Canada? Page 18 of 60 TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012

12 1.3 Communication skills and techniques In previous units you have undertaken you will have learned about communication in the workplace. In the theory of communication there are four (4) elements in the communication process: sender message receiver feedback. Each element has certain considerations to be made, including: framing the message in a way to achieve understanding ensuring the message is sent via the appropriate channel checking the message was received and understood and then seeking feedback. People communicate nonverbally with body movement and with personal relationship behaviours. Culturally, non-verbal communication is that learned subconsciously by observing others in the society. Such communication can either change or complement the verbal communication. Listening is a most important part of the communication process given that our industry exists to fulfil the stated needs and expectations of tourists and travellers. We are unable to meet those needs if we are not actively listening to what we are being told. We are advised to practice active listening by: using supportive eye contact - modified when dealing with a culture that avoids direct eye contact. using posture to show you are listening and hearing being mindful of personal space creating an environment without distractions. Effective business communication uses all of the above described behaviours and more. Effective communication is central to building successful working relationships. It requires honesty and openness combined with mutual respect. Successful communication is thought of by some business commentators as a process of gathering and giving good information in order to achieve mutually satisfactory goals. Mutual respect and clear open, direct and honest communication is exemplified in the assertive style of communication. It is a combination of learned verbal and non-verbal skills that enhances our relationship with others. It helps us to work with others to establish goals, to agree on responsibilities, to identify and resolve problems, and to improve work performance. TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012 Page 19 of 60