Master's Degree Thesis

Master’s degree thesis LOG950 Logistics What Impels Service Innovation in the Tourism Industry in Europe’s Northern Periphery? Supply Chain Management in Tourism Sector Paul Barasa Mung’onye Supervisor: Assoc. Prof. Nigel Halpern Molde, 2008 i Publication agreement Title: What Impels Service Innovation in the Tourism Industry in Europe’s Northern Periphery?: Supply Chain Management in the Tourism Sector Author(s): Paul Barasa Mung’onye Subject code: LOG 950 ECTS credits: 30 Year: 2008 Supervisor: Nigel Halpern Agreement on electronic publication of master thesis Author(s) have copyright to the thesis, including the exclusive right to publish the document (The Copyright Act §2). All theses fulfilling the requirements will be registered and published in Brage HiM, with the approval of the author(s). Theses with a confidentiality agreement will not be published. I/we hereby give Molde University College the right to, free of charge, make the thesis available for electronic publication: yes no Is there an agreement of confidentiality? yes no (A supplementary confidentiality agreement must be filled in) - If yes: Can the thesis be online published when the period of confidentiality is expired? yes no Date: 2008 ii ACKNOWLEDGEMENTS This thesis is an attempt to gain some knowledge of tourism practices and trends in Northern Europe that perhaps tourist practitioners in developing countries that thrive on tourism, like Kenya, can learn lessons from. Some individuals and organizations made the execution of this thesis possible. First and foremost I offer my sincerest gratitude to my supervisor, Nigel Halpern who has supported me throughout the thesis with his knowledge, patience and thorough organization skills. I would also like to sincerely thank all the tourist organizations in Europe‟s Northern Periphery that took their precious time off, at this busiest time of the year, to participate in the survey. ABSTRACT Unlike many parts in Europe, North Europe has seen an increase in tourist activity due to innovation. Ice Hotel Corporation expanding from ice sculptures to ice hotels, Santa Clause Village, Whale Watching, Ski-Resorts etc. are but few examples of many popular tourist attractions inventing new ways and dominating the tourism industry. These places are remote, lack resources and yet have managed to divert attention away from southern tourism based on sun, sand and sea. Because of this, a focus has been on the northern periphery. This thesis is an attempt to find out what drives innovation in these peripheral areas, with a focus on supply chain management processes and practices. The specific objectives are to find out the supply chain‟s main actors and relations amongst actors, information flow, customer relations, supplier relations, capacity and demand management. It also sought to find out what is done to generate new demand and how the performance is after these innovative actions. The study, conducted by an e-mail survey, is based on results of 40 tour practitioners spread out in the northern periphery. The results show that most of the supply chain management processes are implemented, but some need to be strengthened such as arranging to share resources and strengthening relations amongst tourist stakeholders. What the thesis recommends is integration of the supply chain into a seamless unit creating sustained cooperative advantage is vital for innovation, along with forging links with research, academia and other institutions for technical support and investment of information technology to facilitate supply chain coordination and information transfer. The thesis ends by suggesting other possible research areas within supply chain management and innovation and research methods. 1 TABLE OF CONTENTS CHAPTER 1 - INTRODUCTION ................................................................................. 4 CHAPTER 2 - THEORETICAL CONTEXT ................................................................ 7 2.1. Tourism Sector and its Main Elements ............................................................... 7 2.2 Supply Chain Management and Services .......................................................... 10 2.2.1 Information flow.......................................................................................... 11 2.2.2 Capacity Skills Management....................................................................... 11 2.2.3 Demand Management ................................................................................. 12 2.2.4 Customer Relationship Management CRM ................................................ 12 2.2.5 Supplier Relationship Management SRM ................................................... 13 2.2.6 Cash Flow ................................................................................................... 13 2.3 Theories: Resource Base View, Relational Theory and Transaction Cost Theory .................................................................................................................................. 14 2.3.1 Resource Based View and Relational Theory ............................................. 14 2.3.2 Transaction Cost Theory............................................................................. 15 2.4 Innovation .......................................................................................................... 16 2.5 Drivers of Service Innovation ............................................................................ 20 CHAPTER 3 - METHODOLOGY .............................................................................. 28 CHAPTER 4 - FINDINGS .......................................................................................... 38 4.1 Tourism Development Group, Actors and Relations ......................................... 39 4.2 Information and Customer Relations ................................................................. 43 4.3 Managing Current and Future Demand ............................................................. 44 4.4 Capacity Management ....................................................................................... 45 4.5 Supplier Relations .............................................................................................. 47 4.6 Innovation .......................................................................................................... 48 4.7 Performance ....................................................................................................... 48 CHAPTER 5 - MANAGERIAL IMPLICATIONS AND CONCLUSION ................ 51 5.1 Managerial Implications .................................................................................... 51 5.2 Conclusion ......................................................................................................... 56 REFERENCES ............................................................................................................ 60 APPENDICES ............................................................................................................. 64 APPENDIX A - Survey Draft 1 ............................................................................... 64 APPENDIX B - Survey Draft 2 ............................................................................... 68 APPENDIX C – FINAL SURVEY ......................................................................... 72 APPENDIX D. Survey Cover Letter ....................................................................... 76 APPENDIX E - Sample E-mail Messages............................................................... 77 APPENDIX F – Sample Frame: List of Tourism Attractions in the Northern Periphery .................................................................................................................. 78 APPENDIX G – List of Respondents ...................................................................... 87 2 LIST OF FIGURES Figure 2.1 – Tourism Services Sector Model ................................................................ 9 Figure 2.2 – Services Supply Chain ............................................................................. 11 Figure 2.3 - Innovation Obstacles according to a survey by Wiig and Isaksen in one of Europe‟s peripheral regions ................................................................................. 19 Figure 3 - Types of Scales ........................................................................................... 31 LIST OF TABLES Table 2 - Elements of Tourist Products and their Suppliers .......................................... 8 Table 3 - Eligible Regions in the Northern Periphery ................................................. 33 Table 4.1- Responses by Country ................................................................................ 38 Table 4.2 - Tourism Development Group Results ....................................................... 40 Table 4.3- Actors and Relations Results ...................................................................... 40 Table 4.4 - Information and Customer Relations Survey Results ............................... 43 Table 4.5 - Managing Current and Future Demand Survey Results ............................ 44 Table 4.6 - Capacity Management Survey Results ...................................................... 46 Table 4.7 - Supplier Relations Survey Results ............................................................ 47 Table 4.8 - Innovation Survey Results ......................................................................... 48 Table 4.9 - Performance Survey Results.....................................................................

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