C

E

R -A

S A 2 0 12

-A d
va

AL CO N F E RE

N

Advanced Research in Scientific Areas 2012 December, 3. - 7. 2012

nc
e d R e s e a rc h

IR

TU

in

Strategic Factor Analysis Summary- Applicability in the Case of City Tourism in Novi Sad (Serbia)
Nemanja Davidovic
Department of Geography, Tourism and Hotel Management Faculty of Sciences, University of Novi Sad Novi Sad, Serbia nemanja.davidovic@dgt.uns.ac.rs

Abstract - Strategy formulation and strategic planning is often concerned with developing and organizations mission, vision, objectives and strategies. The first step is always situation analysis. Over the years, SWOT analysis has proven to be the most widely used management technique. However, it has drawbacks, mostly related to a single level of analysis and absence of weights to reflect priorities. The SFAS (Strategic Factor Analysis Summary) Matrix summarizes the strategic factors, using weights, rating and weighted score. The results of this study will provide situation analysis and open a process of finding a strategic fit between external opportunities and internal strengths while working around external threats and internal weaknesses in the development of city tourism in Novi Sad, Serbia. Keywords - SFAS, tourism, Novi Sad

The fundamental underlying premise of strategy nowadays becomes the notion that even a larger, more powerful competitor can be defeated if it can be out-maneuvered using strategic skill. As in the battlefield, so is in tourism: organizations attempt to out-maneuver their competitors [1]. Decisions regarding the segments of the market they wish to pursue and the type of tourism products they wish to develop for their markets must all be carefully planned out in what is known as the strategy [2]. The purpose of the strategy is to make an organization (in this case, a city tourism destination) adapt to its environment. There is a need to continually review strategic objectives because the environment is always changing. If there were only one ideal position, there would be no need for strategy [3]. The term strategic management is used synonymously with the term strategic planning. The strategic planning is more often used in the business world, whereas strategic management is often used in academia. Strategic management is the most important activity undertaken by any organization. How skillfully these activities are carried out will determine the eventual long-term success or failure of the organization [4]. The strategic planning process consists of a careful analysis of the tourism industry and the opportunities and threats that competitors and environmental factors may bring. Tourism strategy represents a key challenge to managers because of the nature of the products being sold and of the complexities of the environment in which tourism exists. In particular, strategy is formed by the fact that most

INTERNATIONAL VIRTUAL CONFERENCE http://www.arsa-conf.com

Sc

ien

t i fi c A re as

-

V

Tamara Jovanovic
Department of Geography, Tourism and Hotel Management Faculty of Sciences, University of Novi Sad Novi Sad, Serbia jtamara@uns.ac.rs

tourism products are services rather than goods (because they are intangible) [5]. The first step in strategy formulation is strategic analysis. The purpose of strategic analysis is to gather information about the internal and external environment. External environment is scanned to identify possible opportunities and threats, whereas internal environment is scanned for strengths and weaknesses. Strategic analysis is often referred to as SWOT analysis. SWOT is however only one of the possible techniques for situation analysis. SWOT is an acronym used to describe the particular strengths, weaknesses, opportunities and threats that are strategic factors for an organization. It has proven to be the most widely used and enduring analytical technique in strategic management [6]. A detailed internal and external analysis is a necessary prerequisite for the SWOT information because it emerges from the internal and external analyses. The process sometimes involves an additional stage of condensing SWOT into a survey of the ‘key issues’- those which require the most urgent action or which the strategy should be particularly designed to address [7]. If the information from the analysis is flawed of insufficient, there is no certainty that the strategy formulation will be the right one. Once the destinations internal strengths and weaknesses and its external opportunities and threats have been established, the challenge becomes to select a strategy that will address the weaknesses and threats and, at the same time, will build upon its strengths and exploit its opportunities. Although it is the most widely used management tool, SWOT is not a panacea. Primary criticisms of SWOT analysis are: generation of lengthy lists, ambiguity of words and phrases, only single level of analysis and it uses no weights to reflect priorities. The EFAS (External Factors Analysis Summary) and IFAS (Internal Factors Analysis Summary) tables have been developed to deal with many of the criticisms of SWOT analysis. When used together, they are a powerful analytical set of tools for strategic analysis. The SFAS (Strategic Factors Analysis Summary) Matrix summarizes strategic factors by combining the external factors from the EFAS Table with the internal factors from the IFAS Table. Possible alternative strategies can then be generated by referring to EFAS and IFAS tables in generating TOWS (SWOT backwards) Matrix [8].

I.

INTRODUCTION

SECTION 1. Business Management

- 62 -

This is done by choosing up to 10 chances and threats (individually) that have relevance to the organization and they are sorted in the first column. visas for Serbian nationals have been revoked for traveling in the countries that are in the Schengen Area. Total weighted score tells us how successfully the organization has dealt with their strategic factors. With this. which is still widely distributed.7. RESULTS From Table 1 (in appendix). first of all with buying out military objects and turning the same into cultural centers or accommodation objects.arsa-conf. That has affected the extenuation of the general economical activities. education and expert advanced training of touristic staff. there is still space for further use of this potential. for every factor. Big problem for local businessmen is inadequate tax policy of the state. Analysis of the internal surrounding – IFAS. However. SFAS matrix represents the bases for formulating strategy1 III. each of the factor’s importance is assessed (with grades from 0 – no importance to 1 – of great importance). Multiplication of the weight of the factor and ability of the organization to respond to it gives a weighted score for each individual factor (fourth column). Greater the weight of factors. Candidate status implies greater access to larger number of funds for tourism development and it certainly positively affects the image of this country. After that. In the second column.inadequate. nevertheless these grades are representative enough to illustrate relative importance of certain factors. organizations of same industry can be compared between themselves. Ability of the organization to respond to each of these factors is rated in the third column. is based on the identification and development of the organizational resources. often called organizational analysis. .3 which means that this destination responds below average to challenges from the 1 Although this grading cannot be totally objective. importance of these factors is evaluated again (with grades from 0 – no importance to 1 – of great importance) depending on their influence on the strategic positioning of the organization (second column). as well as world economical crisis that has started in 2008. unstable political situation and slow process of joining EU sends negative signals to the foreign investors. preservation of living surrounding and cultural heritage and other investments of joint interests. taking into consideration their importance for that specific organization. river Danube. Biggest threat for business in Serbia. SFAS analysis synthesizes results of EFAS and IFAS analysis and therefore becomes a very powerful technique of the strategic analysis of the surrounding that has fully responded to the shortcomings of the SWOT analysis.C E R -A S A 2 0 12 -A d va AL CO N F E RE N Advanced Research in Scientific Areas 2012 December. SECTION 1. is corruption. In year 2009. we can see the External Factor Analysis Summary (EFAS) of City Tourism in Novi Sad. Republic of Serbia has become a candidate for the membership in European Union. investing in infrastructural capacities. as well as weakening of the exchange rate of dinar to euro (that kind of situation on the other hand benefits foreign tourists and exporters). considering that it is located on corridor 10 and corridor 7 i. In SFAS matrix strengths. In the fifth column comment is given about the choice of each factor and importance and grade is analyzed. University of Novi Sad has to be included in the industry (so called transformation towards “Entrepreneur University”). explanations and additional comments are written. for both the receptive and initiative tourism. with grades from 1 to 5 (1. The ability of the organization to respond to each of these factors is then analyzed. the bigger the influence that it has on the future success of the company. Finally. first of all charging VAT after charging the goods. depending on their influence to the strategic positioning of the organization. Total importance must be equal to number 1. Since 2010 citizens of EU can enter Serbia with only an ID card as it is the case with other countries that are members of the EU. Chances for the long term sustainable development of tourism are in: creating public-private partnerships in marketing and promotion. since different people have different attitudes. chance or a threat to the organization. Those means are present in the surrounding countries (tax payment through incomes of the receptive tourism. 5 excellent. safety. Conditions to travel have been substantially improved in the last two years. 5 excellent). Final evaluation of the analysis of the external surrounding (EFAS) of Novi Sad is 2. Since March 2012. Next to the factors there is a label that says whether the factor is strength. Multiplication of the weight of the factor and ability of the organization to respond to it gives a weighted score for each individual factor (fourth column). with grades from 1 to 5 (1. Geographic position of Novi Sad (Serbia) is favorable.e. Reform of the tax politics is needed. Sum of the weight has to be equal to 1. chances and threats are summarized into about 10 strategic factors. weakness. High interest and inflation rates influence negatively on business. no matter the number of factors. weaknesses. In the fifth column. not only in tourism sector. Business Management . incentive means for tourist agencies and tour operators that positively influence receptive tourism are necessary. RESEARCH METHODS strategic factors in one table. Total weighted score tells us how successfully the organization reacts to the factors from the external surrounding. This is done by choosing individual factors of EFAS and IFAS analysis that are of the greatest importance to the organization and they are put into first column. 3. Ability of the organization to respond to each of these factors is graded in the third column. 2012 nc e d R e s e a rc h IR TU in EFAS factors can be divided into known categories of chances and threats. In the city of Novi Sad there is a possibility for brownfield investments. Final result is the summary of the most important internal and external INTERNATIONAL VIRTUAL CONFERENCE http://www.com Sc ien t i fi c A re as - V II. This rating shows with which success organization uses chances and responds to threats from the surrounding. It is performed the same way as the EFAS. Average organization in any economy will always have a weighted score 3. Low credit rating of the state. both domestic and foreign).inadequate. The quickest way to accomplish this is through market oriented research and collaboration between research centers and tourism industry. that is certainly one of the most significant water roads in Europe.63 - .

Also. The total weighted score in IFAS and EFAS Tables were also below the industry average of 3. etc. called also “Serbian Athens” and it strives to become European city of culture. Ecological conscious of the local community is also not developed enough. primarily because of outdated and inadequate traffic infrastructure. does not INTERNATIONAL VIRTUAL CONFERENCE http://www. Novi Sad is. largest number arrives during certain. It is very important to repair the outlook of these objects. it is necessary to introduce fines for throwing away garbage outside the bins. that would mean charging for the plastic bags in the stores. . monasteries of Fruska Gora and town Sremski Karlovci. in the Danube. education system should be revised and outdated and unnecessary courses should be excluded. high interest rates and world economic crisis represent largest threats for tourism in Novi Sad. Also. cans. For the development of the adequate tourism strategy. although it has favorable geographical position. From Table 3 (see the Appendix). A strategic fit of future tourism development strategy of Novi Sad should be based on WT Strategies. manifestations and natural resources. on bicycle and mountain paths.). High level of corruption. Insufficient is the support to micro. data should be transferred into TOWS matrix [9]. CONCLUSION This paper showed that SFAS as a situation analysis tool can also be used in tourism industry. and biggest chance is in geographical position on the Danube and corridor 10. Prevention. Education system should be made more flexible and in accordance with the needs of the market and more practical activities should be available for students. on parking lots where tour buses are parked.C E R -A S A 2 0 12 -A d va AL CO N F E RE N Advanced Research in Scientific Areas 2012 December. unclear. we can see the Internal Factor Analysis Summary (EFAS) of City Tourism in Novi Sad. but potentials are not fully used in tourism development.45 which is below the industry average. containers and provided landfills. no recognizable image of Novi Sad. Tourism and Hotel Management. uncoordinated with the needs and contemporary trends and especially contemporary standards. high inflation rate. The total weighted score of SFAS analysis is 2. IV. paying for the return of the plastic packaging. There is tourist organization in Novi Sad. so garbage represents a major issue (beside roads. Novi Sad. there are equally important objects in the near vicinity of the city. The results of this study highlighted 11 most important factors for city tourism development. There is a great need for introduction of incentive means (planned according to the strategy and action plan for tourism). Compared analysis of internal and external surrounding of Novi Sad resulted with the grade 2. first of all. since certain parts are very badly neglected. SECTION 1. Business Management . Prevention and sanctioning action is needed. above all. etc. meaning that generated strategies should be the ones that minimize weaknesses and avoid threats. primarily thanks to the opening of large number of new accommodation objects. small and middle enterprises that want to start their own business. because of cultural heritage. Besides rich cultural heritage in the city itself. we can conclude that the greatest strength for developing tourism in Novi Sad lies in cultural heritage. Serbia. Material base of tourism has been significantly improved in the last decade. popular manifestations. beside the port and marina on the beaches. it is important to clearly define which organization has jurisdiction for the management of these objects. Until that organization happens. For the needs of tourism industry. As we can clearly see in the analysis of the seasonality of the numbers of arrivals and overnight stays of tourists in Novi Sad.arsa-conf. The second step of research should include generation of alternative strategies.81 which means that this destination does not use its advantages sufficiently and weaknesses are overcome below average when compared with other destinations (see Table 2 in the Appendix). 3. such as Novi Sad Fair (Agricultural fair) and music festival EXIT. It successfully overcomes the criticism of SWOT analysis and provides essential information of the industry environment necessary for generation of alternative strategies. From Table 2 (in appendix). The most significant natural resources in Novi Sad and surrounding are river Danube and National Park Fruska Gora. through the case study of city tourism in Novi Sad. 2012 nc e d R e s e a rc h IR TU in surrounding when compared with other destinations (see Table 1 in the Appendix). ecological consciousness is low and above all. Republic of Serbia (grant: 176020). inconsistent. ACKNOWLEDGMENT The paper is supported by Ministry of Education and Science.00. Final evaluation of the analysis of the internal surrounding (IFAS) of Novi Sad is 2. The research that is presented here is a part of the doctoral dissertation of Nemanja Davidovic at the University of Novi Sad. These should include other strategic management tools applied in the field of tourism.7. it is necessary to elect the director of the tourist organization by means of competition. Tourist offer of Novi Sad is diversified. but unfortunately it is not organized and run according to the principles of the organization for management and marketing of the destination. micro.64 - . Entrepreneurs. Multiethnicity of Novi Sad also contributes to its tourist attractiveness. Labor power in tourism sector has substantial education.com Sc ien t i fi c A re as - V use it enough. thanks to the tourism studies at the Department of Geography. The methodology used in this paper is recommended in the future situation analysis of tourism in other markets.45. (these actions have given positive results in Germany). for the receptive tourism as well. represent the greatest weaknesses. small and middle enterprises don’t have enough support from the state in starting their own business. which means that Novi Sad as tourist destination is below average in comparison to other destinations (see Table 3 in the Appendix). City of Novi Sad does not have a recognizable image.

05 0. Jordan. cultural and historical spatial areas. 1996.. Strategic Management in Tourism. 2011 R. “The Learning Area Principles as a Framework for the Development of Tourism Development Strategy of Novi Sad”.W.arsa-conf. Moutinho.S.05 0.05 1 1 1 2 2 1 2 2 2 0. .petrovaradinski rit Visa regime THREATS World economic crisis High interest rates High inflation rate Unstable political situation High corruption rate Low credit rating of Serbia Slow EU accession process Inadequate tax policy TOTALS INTERNATIONAL VIRTUAL CONFERENCE http://www.1 0. Chichester: John Wiley & Sons Ltd.1 2.com Sc ien t i fi c A re as - V REFERENCES [6] [7] [8] [9] S.. 2000 External Factors CHANCES Geographical location EU candidate country status Cooperation of academia and private sector Possibilities for Brownfield investments Public-private partnerships Nature reservation Koviljsko.. 1999 M.M. Strategic Management. Oxon: CABI Publishing.15 0.09 0.R. New Jersey: Prentice Hall.C E R -A S A 2 0 12 -A d va AL CO N F E RE N Advanced Research in Scientific Areas 2012 December.03 0. Business Management .15 0.65 - .4 0.09 0. New Jersey: Prentice Hall. Essentials of Strategic Management.03 0.Davidovic. Foundations of Strategy. 2012 L. New York: Harpercollins Publishers Inc. Harvard Business Review.P. better image of Serbia and Novi Sad Market orientated research and cooperation of R&D centers and tourism business Transformation of military real-estate Foundation of efficient long-lasting models of PPP to increase the competitive advantage of Novi Sad tourism offer Potential for ecotourism development Abolishment of visa regime in Schengen area for citizens of Serbia and travel of EU citizens to Serbia with a valid id (passport no longer required) 0. What is Strategy?. 2006 J.1 0.1 0.D.. Porter. Internal Factors INTERNAL FACTOR ANALYSIS SUMMARY (IFAS) OF CITY TOURISM IN NOVI SAD Weight STRENGTHS Rating Weighted Score Comment Cultural heritage Natural resources 0. 2012 C.01 0. Weight EXTERNAL FACTOR ANALYSIS SUMMARY (EFAS) OF CITY TOURISM IN NOVI SAD Rating Weighted score Comment 0. close to Airport Nikola Tesla New funds for tourism development available. Wheelen. Deimler.2 0. 2012 nc e d R e s e a rc h IR TU in [1] [2] [3] [4] [5] P.7.Drucker.25 Corridors 7 and 10.05 0. Grant & J. pp. unpublished APPENDIX TABLE I. 2011 N.05 0.03 0. medieval monasteries on Fruska gora Danube.L. New Jersey: The Boston Consulting Group.1 0. SECTION 1. Coulter.15 0.F.3 Decrease of all economic activities.2 0.28 Petrovaradin fortress.03 0.07 4 4 0.1 0.1 0. 61. low Serbian Dinar exchange ratio High interest rates discourage credit financing High inflation rate (higher than 10%) creates unfavorable business climate Relations to EU and open issues with Kosovo* Corruption is wide spread and has a high rate Credit rating of Serbia is BBThe reform process in Serbia is slow VAT should be collected at the payment date TABLE II. Doctoral thesis.78 F. Management.09 0.Concepts and Cases.05 4 4 3 3 3 3 5 0. New Jersey: Prentice Hall. J. Robbins & M. E.1 0. Management Challenges for the 21st Century.1 0. Stern & M. NP Fruška gora. The Boston Consulting Group on Strategy. 3.1 0. David.6 0. Hunger & T.

3. contemporary tourism trends and standards Undefined image of Novi Sad as a tourism destination TOTALS 0.15 0. and inadequate to its demand.6 0.15 Weight 0.05 0.2 0.05 0. unclear.04 0.2 0.03 0.com Sc ien t i fi c A re as - V Events Educated work force Developed tertiary sector Material base of tourism Existing DMO Multiculturalism 0.01 0.01 0. contemporary tourism trends and standards Comment Corridors 7 and 10.C E R -A S A 2 0 12 -A d va AL CO N F E RE N Advanced Research in Scientific Areas 2012 December.1 0.02 0. railroad and corridor 7 are not fully utilized Increase in population is due to migration Construction sites and buildings without permit No funds for promotion of investments Lack of start-up loans for incoming tourism Rubbish and litter problems Education courses should contain more internships and be market orientated Tourism offer of Novi Sad is highly diversified.2 0. cultural and historical spatial areas.1 0..02 0. Novi Sad Fair. low Serbian Dinar exchange ratio High interest rates discourage loan financing High inflation rate (higher than 10%) creates unfavorable business climate Corruption is wide spread and has a high rate SECTION 1.45 Comment Petrovaradin fortress.01 0.1 0.05 0.05 0.81 TABLE III.25 0.02 0.05 0. .1 0.2 0.05 0.. lack of subsidies for investors on city level Lack of support for SMEs and new entrants in tourism Lack of integrated cultural centre and lack of organization for cultural heritage management Low environmental awareness Gap between education courses and market needs Lack of support for SMEs and new entrants in tourism Low environmental awareness Undefined image of Novi Sad as a tourism destination External Factors Geographical location World economic crisis High interest rates High inflation rate High corruption rate TOTALS INTERNATIONAL VIRTUAL CONFERENCE http://www..1 EXIT. inconsistent..15 2.05 0. inconsistent..01 0.5 0.02 WEAKNESSES 5 5 4 4 3 5 0.1 0.03 0. and inadequate to its demand.1 0. close to Airport Nikola Tesla Decrease of all economic activities.66 - .05 0. Novi Sad Fair.1 0.15 Weighted Score 0.1 0.12 1 Rating 4 4 5 2 1 1 Rating 4 1 1 2 1 Weighted Score 0. NP Fruška gora.04 0..15 0.7.1 0.01 0.5 0. medieval monasteries on Fruska gora Danube.1 0. Lack of start-up loans for incoming tourism Rubbish and litter problems Tourism offer of Novi Sad is highly diversified. Tourism courses at University of Novi Sad Increase in number of beds and accommodation facilities in the past 10 years Tourism organization of Novi Sad Geographical location is not fully utilized Aging population City economy lacks compatibility with resources available Lack of spatial planning and irrational usage of space 0.05 2 4 2 1 2 2 1 1 3 0.1 0. Business Management .4 0.arsa-conf.1 0.15 1 1 0.15 Corridor 10. unclear. EXIT.05 0. Internal Factors Cultural heritage Natural resources Events Type Strength Strength Strength Weakness Weakness Weakness Type Opportunity Threat Threat Threat Threat STRATEGIC FACTOR ANALYSIS SUMMARY (SFAS) OF CITY TOURISM IN NOVI SAD Weight 0. 2012 nc e d R e s e a rc h IR TU in Lack of infrastructure adapted locations ready for investors.12 2.