SIT07 Tourism, Hospitality and Events Training Package SAMPLE. Learner guide. Version 1

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1 SIT07 Tourism, Hospitality and Events Training Package SITXMGT006A Establish and conduct business relationships Learner guide Version 1 Training and Education Support Industry Skills Unit Meadowbank Product Code: 2704

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 resource. Project manager: Reg Edwards Education Programs Manager TAFE NSW Training and Education Support Industry Skills Unit, Meadowbank Project Team Joanna Visser Teacher, Travel and Tourism TAFE NSW Enquiries Enquiries about this and other publications can be made to: TAFE NSW Training and Education Support Industry Skills Unit, Meadowbank Locked Bag No. 6 MEADOWBANK NSW 2114 Tel: Fax: The State of New South Wales, TAFE NSW Training and Education Support Industry Skills Unit, Meadowbank, 2008 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 for the purposes of private study or research, and 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 i

3 Table of Contents INTRODUCTION... 1 Unit overview... 1 Unit outcomes... 2 Suggested learning resources... 3 Assessment for this module... 4 Glossary of terms used in this module... 5 TOPIC 1 BUILD BUSINESS RELATIONSHIPS... 7 TOPIC 2 CONDUCT NEGOTIATIONS TOPIC 3 MAKE FORMAL BUSINESS AGREEMENTS TOPIC 4 FOSTER AND MAINTAIN BUSINESS RELATIONSHIPS DISCLAIMER: While we have made efforts to ensure that the information contained is accurate, the tourism, hospitality and events industry is dynamic. Some businesses cease to operate while others start up, new products are developed and existing ones are modified. Refer to your trainer for current updated information. iii

4 TOPIC 1 BUILD BUSINESS RELATIONSHIPS At the end of this topic you should be able to: Establish relationships within appropriate cultural context in a manner that promotes goodwill and trust between the organisation and its customers and its suppliers. Build trust and respect in business relationships through use of effective communication skills and techniques. Identify and take up opportunities to maintain regular contact with other businesses, customers and suppliers. Introduction 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. 7

5 SITXMGT006A Establish and conduct business relationships Activity What do you understand to be the meaning of the term business relationship? 2. 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? 8

6 Feedback 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 firms that they do business with, in order for them to make a profit and be successful. One of the most important benefits of having a good relationship with your travel agent is that the better they know you the better their position to service your needs. In regard to the benefits an organisation will gain from having strong relationships with suppliers the most important inevitably will be in regard to getting advance warning of changes to such things as prices, commissions etc and having access to special rates and conditions. Establishing Business Relationships Establish relationships within appropriate cultural context in a manner that promotes goodwill and trust between the organisation and its customers and its suppliers. You are already aware of the fact that tourism, hospitality and events businesses interrelate with one another to provide a customer s experience. As such it is important for you to consider all the firms 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 firms and organisations in the tourism, hospitality and events industry will provide many positive advantages to your business, not the least of which will perhaps 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: Whether you secure good rates from suppliers. Your knowledge of the industry so far allows you to understand the significance of this point. Obviously the better the rate/s you can negotiate the more attractively you can package the price for the customer and of course 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. Of course, in their view, doing business with these firms 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 and so on with a rapid turnaround. If your firm 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. 9

7 SITXMGT006A Establish and conduct business relationships How well intermediaries and suppliers promote you. You already know that preferred product agreements often dictate what tourism intermediaries recommend and sell to consumers. However a firm 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 firm has with its suppliers, the customer relationship is nevertheless 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 what is often an expensive product, one that is intangible. They therefore must rely on advice provided to them by sellers as to the quality and features of the product they are buying. As such, deciding which business to place their trust in is often a daunting activity for the customer. They 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. Of course 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 therefore 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 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. 10