SIT07 Tourism,
Hospitality and Events
Training Package V3.0
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SITXMGT006A
Establish and conduct
business relationships
Learner guide
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Version 2
Training and Education Support
Industry Skills Unit
Meadowbank
Product Code: 5646
SITXMGT006A Establish and conduct business relationships V2
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
Project Manager
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Karin Rule
A/Manager Industry Teams
TAFE NSW Training and Education Support, Industry Skills Unit Meadowbank
Enquiries
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Margaret Heathcote
A/Education Programs Manager,
TAFE NSW Training and Education Support, Industry Skills Unit Meadowbank
Enquiries about this and other publications can be made to:
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Training and Education Support, Industry Skills Unit Meadowbank
Level 3, Building J,
See Street,
MEADOWBANK NSW 2114
Tel: 02-9942 3200
Fax: 02-9942 3257
© 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 978-1-74236-360-8
© TAFE NSW (Training & Education Support, Industry Skills Unit Meadowbank) 2012
SITXMGT006A Establish and conduct business relationships V2
Table of contents
Introduction .................................................................................. 7
Topic 1
Business relationships .................................................. 11
1.1 Defining a business relationship ........................................................ 13
1.2 Establishing business relationships .................................................... 13
1.3 Communication skills and techniques ................................................. 19
1.4 Maintaining industry contacts ............................................................ 20
1.5 Developing business relationships...................................................... 20
1.6 Utilising social occasions................................................................... 21
1.7 Gifts and other inducements ............................................................. 22
Negotiation skills ......................................................... 27
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Topic 2
2.1 Conducting negotiations ................................................................... 27
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2.2 Factors affecting negotiations ........................................................... 30
2.3 Preparing for negotiations ................................................................ 37
2.4 Outcomes of negotiations ................................................................. 37
Topic 3
Make formal business agreements ............................... 43
3.1 Contracts ....................................................................................... 43
Topic 4
Fostering and maintaining relationships ...................... 49
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4.1 Proactively seek, review and act ........................................................ 49
4.2 Honouring agreements ..................................................................... 49
4.3 Adjustments to agreements .............................................................. 50
4.4 Nurturing relationships ..................................................................... 50
Unit summary .............................................................................. 53
Glossary of terms ........................................................................ 54
Reference list .............................................................................. 55
Resource evaluation form ............................................................ 57
© TAFE NSW (Training & Education Support, Industry Skills Unit Meadowbank) 2012
SITXMGT006A Establish and conduct business relationships V2
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.
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Business relationships
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What do you understand to be the meaning of the term ‘business
relationship’?
© TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012
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SITXMGT006A Establish and conduct business relationships V2
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?
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(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?
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© TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012
SITXMGT006A Establish and conduct business relationships V2
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.
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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.
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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:
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if you secure good rates from suppliers
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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.
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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.
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SITXMGT006A Establish and conduct business relationships V2
•
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.
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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.
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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.
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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).
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Integrity: honesty and truthfulness.
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Competence: technical and interpersonal knowledge and skills.
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Consistency: reliability, predictability and good judgement in handling
situations.
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Loyalty: willingness to protect people and save face for them.
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Openness: willingness to share ideas and information freely.
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© TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012
SITXMGT006A Establish and conduct business relationships V2
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.
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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 e-mail or letter.
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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).
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You would make sure you arrive on time at the location selected.
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You would dress in appropriate business clothing, such as a suit and well
groomed.
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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.
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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.
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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
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This includes understanding:
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the way the culture thinks and reasons
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the cultural laws and rules, including religion and religious beliefs
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communication, including language, both body and verbal. Is English widely
spoken?
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cultural sensitivity and intercultural communication
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their customs including:
manners
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greetings and introductions
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apology and respect
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entertaining, eating and drinking etiquette
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gift giving and receiving
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the use of humour
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women, men and relationships
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business expectations.
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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.
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Accommodation preferences including room choice, attitudes towards
cleanliness.
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Dining preferences, including type of cuisine, use of alcohol.
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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.
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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.
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© TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012
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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.
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4.
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3.
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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
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arrange a meeting
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dress
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behave during the meeting
Would this vary if you were meeting a representative from Canada?
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© TAFE NSW (TES, Industry Skills Unit Meadowbank) 2012
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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:
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sender
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message
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receiver
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feedback.
Each element has certain considerations to be made, including:
framing the message in a way to achieve understanding
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ensuring the message is sent via the appropriate channel
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checking the message was received and understood and
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then seeking feedback.
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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.
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using posture to show you are listening and hearing
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being mindful of personal space
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creating an environment without distractions.
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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
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