Table of Contents
Q.1. What are the issues faced by food & beverage service industry in relation to ‘consumer concerns’ ?(10)
Restaurants understands the challenges and opportunities facing all segments of the food and beverage (F&B) industry—from production to distribution of proteins, dairy products, produce, snack foods and more.
Industry issues like changing consumer preferences, innovation and food safety issues are placing tremendous pressure on industry executives. In response, F&B companies are reshaping their operations to respond to customer needs while enhancing their efficiency.
1. Changing demographics: New consumers like Generation Z are powering growth based on their taste and lifestyle preferences. They like products that are ethnic, healthy, locally sourced and environmentally packaged. To add such products to their portfolios, major food and beverage players have moved away from the financial commitment required for in-house research and development programs, to acquiring startup and entrepreneurial companies with promising brands, often with health or sustainability appeal.
2. Digital transformation: The digital fluency of millennial shoppers who expect omnichannel options—buying in stores, online and via smartphone—points to the critical need for a secure and customizable digital infrastructure. F&B companies are using digital and social media platforms to connect with customers on their terms, with offers geared to the customers’ unique profiles.
3. Food safety: Unfortunately, food safety concerns continue to grow. Both global and local product sourcing add risk to supply chains through unsafe handling, transportation and food-borne illnesses. Recalls and outbreaks of illnesses create high levels of reputational and financial risk.
4.The rise of health-consciousness among consumers
The increasing incidences of food-related disorders have prompted consumers to bring about vital changes in their diet and lifestyle, making them more health-conscious than ever. The demand for products that do not carry the ‘healthy’ label is then bound to reduce, and to stay at the top, the need to eliminate artificial constituents from products has come to the fore as one of the major challenges faced by food and beverage managers.
5. The rising concerns about product traceability
Traceability is one of the pivotal challenges in food and beverage industry, not just for record management but also to fulfill the bottom line – generating revenue for every sector. Of late, consumers have been taking increasing interest to know what goes into their food, that has led ‘ingredient labelling’ forming a major part of the packaging process.
6. The ascent of meat-free & veganism trend
The growing concern toward animals is ushering in a change in the food patterns of the masses. With more and more consumers vying for vegetarian and vegan products, the demand for meat and other products has observed a significant decline, posing as one of the major challenges in food and beverage industry. Social platforms and online information portals have paved the way for animal abuse awareness, and people prefer purchasing products with labels such as “humane-certified” and “cage-free”.
7. The increasing complications of inventory management
Given the limited shelf life of food products, inventory management has come up to be one of the current issues in the food industry. The perishability factor is responsible for fact that F&B inventory is highly susceptible to foodborne pathogens and more, if not stored hygienically. This has prompted manufacturers to adopt new software to alleviate these issues, given that the presence of foodborne bacteria may have a disastrous impact on the company’s reputation.
8. The pervasive presence of eCommerce
An online presence is one of the major challenges of food and beverage industry, considering that consumers are more tech-savvy and socially informed, thanks to the Internet. While core industries, like appliances, electronics, textiles, and other domestic products have already established their presence in the commerce domain, this sector has been relatively slow on the upkeep.
9. The ‘Plastic ban’
The enforcement of the ‘plastic ban’ is rooted in an ideology that has lasted several years amid discussions on international platforms and has now come to fruition. The consistent growth pace of industrialization, of which the F&B sector is a major arm, has had a disastrous impact on the environment, and has led to eco-friendliness becoming the next big mantra out there. Knowingly or unknowingly, the excess consumption and improper disposal of plastic has come up as one of the major challenges faced by food and beverage managers today.
OR
How would you derive the food & beverage cost for a new Chinese restaurant in a metropolitan city of India? Explain.(10)
Factors affecting Price of the menu
• Costing
• Type of restaurant
• Style & elaborateness of service
• Competition
• Clientele
• Profit objective
• Meal occasion/time
There are two main types of pricing methods-
i) Subjective Pricing Method
ii) Objective Pricing Method
Subjective Pricing Method–
• Prices determine to a large extent whether the financial goals of the operations are met
• Subjective pricing methods are based on assumptions
• Subjective pricing is not directly linked to the costs of the product
Types of Subjective Pricing
1. Reasonable pricing method
2. Highest pricing method
3. Loss leader pricing method
4. Intuitive pricing method
Reasonable pricing method
• Operator’s thinking will predict the price to the guest
• “How much i am willing to pay for this item, considering the type of establishment”
• the answer to this is reasonable pricing method
Highest pricing method
• Operator sets the highest price for the item he thinks the guest is willing to pay
• This is the concept of pushing the price to the maximum
Loss leader price method
• In this pricing some of the menu items are priced very low
• The philosophy of this pricing is that the guest will buy other items as well when he has been attracted to buy low priced items
• It is important to sell other profitable items in order to make profit
• It may be early bird promotion too
Intuitive pricing method
• Prices are set by the institution of the operator alone
• Wild guess works for such pricing
• It requires less effort & concern to the customer as its not linked to the value for price.
Objective Pricing Method-
Prices determine to a large extent whether the financial goals of the operation are meet.
Objective Method pricing is based on cost of the product and profit.
1. Simple Mark-up Pricing Method
• Ingredients Mark Up
• Prime ingredients Mark Up
• Mark Up with accompaniments
2. Contribution Margin Pricing Method
3. Ratio pricing Method
4. Simple prime cost method
5. Specific prime cost method
A. Simple Mark-up Pricing Method
It considers a mark up from the cost of the goods sold (in case of menu item that would be the standard food cost) the mark up is designed in such a way that it covers all costs to yield the desired profit levels
1. Ingredient mark up method :
• Determine ingredients cost
• Determine multiplier to the mark up
• Determine base selling price
2. Prime ingredient mark up method
Mark up pricing is directly linked to the main/prime ingredient of the item
3. Mark up with accompaniments costs
Operator determines the ingredient cost based only upon the entrée item & then the standard accompaniment cost is added before multiplying with the mark up contributions.
B. Contribution Margin Pricing Method
Contribution margin = selling price – food cost
Example to calculate C.M. Pricing
Non food costs = ₹695,000
Profit required = ₹74,000
No. Of guests expected to be served = 125,000
Food cost of a menu item = ₹4.60
Ave. C.M./guest = non F.C.+profit required/total guests
= (₹695,000+₹74,000)/125,000=₹6.192
B.S.P. = 4.60 + ₹6.192 = 10.8
C. Ratio Pricing Methods
Food cost = ₹ 435,000
Non food cost = ₹ 790,000
Profit requirements = ₹ 95,000
F.C. of menu item = ₹ 4.75
•Determine the ration between F.C. , N.F.C. & profit
N.F.C. +profit/F.C. = Ratio
790,000+95,000/435,000 = 2.03
the ratio implies that for every ₹ 1 earned to cover food cost we have to earn ₹ 2.03 to cover N.F.C & profit.
•Amount required to cover n.f.c & profit =₹ 4.75 x 2.03 = ₹9.64
•B.S.P. = ₹9.64 + ₹4.75 = ₹14.39
D. Simple Prime Cost method
Prime costs refers to the significant costs in f & b operations such as food cost & labour cost.
Example to calculate simple prime costs method:-
Menu item F.C. = ₹3.75
Labour cost = ₹ 210,000
No. Of exp. Guests = 75,000
Desired prime cost = 62%
•Labour cost per guest = ₹ 210,000/75,000= ₹2.8
•Prime cost per guest = ₹ 3.75 + ₹ 2.8 = ₹6.55
•B.S.P. = prime costs per guest/desired P.C.
= ₹6.55/62% = ₹10.56
E. Specific Prime Cost Method
Operator develops mark ups for menu items which takes into account their food costs & also fair share of labour cost
Menu items requiring more labour intensive preparation would have a higher mark up & those requiring less labour would have less mark.
Q.2. What is budget? Discuss the budgeting process for food & beverage service management.(10)
A budget is the monetary or and quantitative expansion of business plans and policies to be pursued in the future period of time. The term budgeting is used for preparing budgets and other procedures for planning.
Budget portrays the intentions of Management about future plays … it indicates sales to be made, the expenses to be incurred, and the profit or income to be received.
Importance Of Budget
It is difficult to overstate the importance of a meaningful budgeting process for a hotel. Ultimately the budget represents the
implementation of the Owners and Operators vision for the hotel. It the means by which the Owners and the operators achieve the qualitative goals we associate with the brand or style of the hotel and the quantitative goals of achieving a well-run , efficient and profitable business. Moreover, it is often used as a means to judge the performance of the operator.
Classification
According to time
1. Long-term Budgets
2. Short-term Budgets.
3. Current- Budgets
On the basis of functions
1. Functional or subsidiary Budgets
2. Master Budget
On the basis of flexibility
1. Fixed Budget
2. Flexibility
The following stages would be useful while preparing a budget for the restaurant/ catering unit:
1. Establishing financial objectives
A company’s financial needs or goals for the future. Corporate financial planning involves identifying these financial objectives and determining how to achieve them.
2. Forecasting revenue
Revenue forecast is an estimate of the revenue over the fixed period and that is a necessary step in the budgeting.
3. Estimating expenses
Same as the forecasting of the revenue ,the expenses which are going to occur in next period is also forecasted.
4. Determining net income
After the expense and revenue, net income is determined and the target is set according to the budget.
5. Reviewing and approving the budget
In the final stage, the budget is once again reviewed and if any mistakes are found they are corrected & approved.
Once the budget is approved, operational budgetary control methods need to be followed for proper financial management by the food and beverage department.
Different types of budgets are prepared for different purposes e.g. sales budget, production budget, raw material budget, administrative budget etc. all these sectional budgets integrated into a master budget which represents an overall plan of the organization.
Q.3. What are the various pricing strategies for accommodation sector in hospitality management?(10)
Some of the hotel room rate pricing strategies are-
1. Occupancy-based dynamic pricing
Occupancy-based dynamic pricing strategy in a hotel is a great way to increase room revenue. Make sure that you are pricing your hotel rooms based on supply and demand. We must increase room rates when demand exceeds supply. For example – if 45 out of 50 rooms are occupied, we can charge more for the remaining 5 rooms. This approach will increase ADR and RevPAR. Additionally, at low demand seasons, when the occupancy is low, we can charge less for the room to attract bookings.
2. Forecasting-based pricing
It is all about tweaking hotel room price while forecasting the number of rooms that would be available for future dates. For this, we should have a clear understanding of the hotel’s historical data – occupancy data for the last couple of months and for the same period during the previous year. This would give us an idea on how the occupancy might look on a given date. That’s how a proper forecasting would allow us to make necessary changes in the room rates, based on demand and expected occupancy. To be noted here, the forecast would also depend on the increase or decrease in travellers coming to the locality or an increase or decrease in the competitors in your segment.
3. Competitor-based pricing
We will be able to come up with a competitor-based hotel room rate pricing strategy only when we understand at what rates competitors are selling their rooms. When we talk about competition, consider hotels that come in our segment and star category.
We also need to compare the rates with their rates and see if our offer value to the guests. When done and monitored properly, this will help us to understand what customers are already paying and how much they will be willing to pay. Armed with these insights, tweak the hotel room price so that we can sell rates at competitive rates.
4. Length of stay based pricing
This is also referred to as Best Available Rate by Length of Stay. Under this hotel pricing strategy, we can make changes in the room rates based on both the arrival date and the total duration of a guest’s stay. To come up with the right pricing, we need to demand, forecast, business on the books and even the price sensitivity. We should modify the room pricing either based on maximum length of stay or minimum length of stay to enhance occupancy. The most important thing here is that guests get to pay one rate for their entire stay.
Some other hotel room pricing strategies that can help us are –
• If the check-in day is Wednesday and check out day is Saturday, you can charge more for the Friday night alone. It is simple because weekend rates are always on a higher side.
• Implement daily pricing strategy and charge different rates for each night of a guest stay.
• Implement an hourly pricing strategy for rooms that are expected to be sold in the near future – by tomorrow or the day after tomorrow.
• Revise your TA and Corporate contracts at regular intervals, based on your ADR, demand and performance of your hotel.
• Implement a ‘no refund cancellation policy’ in peak seasons when your occupancy looks good.
5. Guest segment-based pricing
In this scenario, we can change the price of the same room for different types of guest segments. This is all about selling the same room at different prices to different types of guests. For example, we can charge more for a sea-facing suite room, but at the same time, we charge a little less for a normal suite room on any given date.
Other Noteworthy pricing strategies in the hotel industry that you could also consider implementing:
6. Psychology-driven pricing strategy: Understanding human psychology can also go a long way in taking key business decisions. This includes other areas of your business as well, like marketing, sales, employee engagement, guest experience, etc. Similarly, psychology can also help you with building a better and more impactful hotel pricing strategy.
For example:
Psychology suggests that people read numbers at a glance from left to right. And when a price ends with a 9, instead of a whole 0, they are more likely to go for it. This can be a game changer for you while creating your hotel room pricing strategy. What this means is, let’s say you sell a certain room type at $200. Bookers are more likely to go through with the booking if the price were $199 instead of $200. For you it is a difference of $1. But that $1 can go a long way in convincing the booker that you are priced fairly.
7. Packages: Offering packages is one of the most effective pricing strategies in the hotel industry. Instead of just selling just rooms, you could create specific packages inclusive of additional offerings/services at a reasonable rate. This compels people to believe that they are getting more for less.
Packages could be as simple and universal as “Breakfast packages’ (which could include an elaborate buffet breakfast for a price that is much more affordable than what it would cost the guest if they were to opt for it separately) or something more personalized like a ‘Honeymoon package’ where you could throw in multiple activities and services for couples at an irresistible price. There are several ways to design packages and just as many factors that affect it. So, study your audience and understand what would work best for your hotel.
OR
What are the various distribution channels for accommodation in hotels of India?(10)
Hospitality Distribution Channels
Distribution Channels describes the different methods / platforms buy which / in which bookings for a hotel are made. A Channel can be a hotel’s booking engine, a direct phone reservation or a specific stream of revenue such as a 3rd party website, an OTA, etc.
The hotel distribution channels are-
1. DIRECT BOOKING
Direct bookings are customers who reserve your tours and activities directly through you. A person who books a tour online after seeing your advertisement in a travel brochure is considered a direct booking for your business.
Means through Official website
2. ONLINE TRAVEL AGENTS (OTA)
OTAs are online companies whose websites allow consumers to book various travel related services directly via Internet. They are 3rd party agents reselling trips, hotels, cars, flights, vacation packages etc. provided / organised by others.
Online Travel Agents (OTAs) examples-
Booking.com.
Expedia.com.
Airbnb.com.
Orbitz.com, etc
3. GLOBAL DISTRIBUTION SYSTEM (GDS)
A global distribution system is a computerised network system owned or operated by a company that enables transactions between travel industry service providers, mainly airlines, hotels, car rental companies, and travel agencies.
For example, Sabre is used by American Airlines, PARS by USAir, Galileo, TravelSky, and Worldspan.
4. TRAVEL AGENTS
Travel Agent is a person whose job it is to arrange travel for end clients (individuals, groups, corporations) on behalf of suppliers (hotels, airlines, car rentals, cruise lines, railways, travel insurance, package tours). His task is to simplify the travel planning process for their customers in addition to providing consultation services and entire travel packages.
5. TOUR WHOLESALERS
Tour wholesalers operate in a very similar way to wholesalers in other industries. However, instead of supplying tangible products they supply touring options including travel, accommodation, and tours. A tour wholesaler supplies to retail travel agents, they DO NOT sell directly to consumers.
6. HOTEL REPRESENTATIVES
Hotel representative are a company serving the travel agent channel that serves as the booking contact for a hotel or group of hotels.
7. NATIONAL, STATE & LOCAL TOURIST AGENCIES
A travel agency is a private retailer or public service that provides travel and tourism-related services to the general public on behalf of accommodation or travel suppliers.
8. CONSORTIA & RESERVATION SYSTEMS/ Central Reservation System
Central Reservation System is a type of reservation software that is used to update and maintain information of a hotel pertaining to inventory and rates so that hotels are able to manage guest reservations and the process around such reservations in real time.
Example- Abacus, Amadeus, Travelsky, etc
Q.4. What is CRM? Define the role and benefits of CRM in hospitality industry.(10)
Customer Relationship Management In Hospitality Sector
CRM is a powerful management tool that can be used to exploit sales potential and maximize the value of the customer to the hospitality industry. In the long term, CRM produces continuous scrutiny of the hospitality business with the customer, thereby increasing the value of the customer’s business.
Hospitality sector’s greatest assets are their knowledge of their customers. They can use this asset and turn it into a key competitive advantage by retaining those customers who represent the highest lifetime value and profitability.
They can develop customer relationships across a broad spectrum of touch points such as their franchise branches. Simply implementing a solution intended to achieve organizational goals is not enough to achieve CRM success.
The process should ensure that these goals are achieved. The hospitality sector needs a comprehensive CRM strategy in which all departments within the hospitality sector integrates. Customers are the backbone of any kind of business activity, maintaining the relationship with them yields better results.
By capturing, tracking and analyzing customer service data, CRM enables a firm to identify new performance issues. Customer data will help a firm in identifying new product development opportunities, provide personalized services to the customer based on their behavior and responses.
Benefits of using CRM in Hospitality Industry
CRM has some obvious benefits for the hotel industry, but these are not especially different than they are for any other industry. The principal benefits that come to mind are fairly obvious –
• Increased customer satisfaction and retention, increased repeat business,
• Increased share of category spend,
• Increased likelihood of referral business.
• Increased sales through better timing by anticipating needs based on historic trends
• Identifying needs more effectively by understanding specific customer requirements
• Cross-selling of other products by highlighting and suggesting alternatives or enhancements
• Identifying which of your customers are profitable and which are not This can lead to better marketing of your products or services by focusing on:
• Effective targeted marketing communications aimed specifically at customer needs
• A more personal approach and the development of new or improved products and services in order to win more business in the future
• Enhanced customer satisfaction and retention, ensuring that your good reputation in the marketplace continues to grow
• Increased value from your existing customers and reduced costs associated with supporting and servicing them, increasing your overall efficiency and reducing total cost of sales
• Improved profitability by focusing on the most profitable customers and dealing with the unprofitable in more cost effective ways
These results come from a strategy of strengthening customer relationships by constantly providing customer value leading to satisfaction.
Q.5. How is the safety standards different from security system in hotels?(10)
Safety is the prevention of accidents (accidents which may or may not involve human agents, but are in any case not intentional).
Security is the prevention of malicious activities by people (mugging, burglary, robbery, terrorist activities, etc.).
So safety may include activities such as clearly marking pits and holes on a building site to avoid people accidentally falling into them. Or putting up warning signs to warn people that there is high-voltage equipment past a certain point and the general public should stay the hell away.
Security involved checking passengers and their luggage for forbidden items which could be used to attack others in the building.
The notable difference between security and safety is that security is the protection against deliberate threats while safety is the aspect of being secure against unintended threats.
Security is geared towards the protection against criminal activities that are perpetuated by criminals. On the other hand, the safety of a person is mostly installed so that a person can be protected against unintended accidents.
Safety Standards in Hotels
The steps involved in a safety programme-
1. Review work procedures-JOB SAFETY ANALYSIS
2. Make department heads aware of the nature and variety of hazards-
3. Establish a SAFETY COMMITTEE
4. Train staff members to implement Safety consciousness.
5. Practice Safety management
6. Investigate, analyse all incidences that occur inspite the Safety Management programme.
7. Evaluate the effectiveness of the Safety Management Programme from time to time.
Three E’s of safety
1. Safety education
2. Safety engineering
3. Safety rules enforcement
SIGNS AND TAGS for safety.
1. DANGER SIGNS– they indicate immediate danger and necessity of special precautions. OSHA signs of danger are in the colours-RED, BLACK and WHITE. Eg where caustic cleaning chemical has spilled.
2. CAUTION SIGNS-they warn against potential hazards. Their colors are YELLOW and BLACK.
Eg. A wet floor due to spillage or mopping.
3. SAFETY INSTRUCTION SIGNS-they gives general instructions in certain areas. They are GREEN and WHITE OR BLACK and WHITE. Eg. To instruct employees not to eat, drink or smoke in a storage area.
4. ACCIDENT PREVENTION TAGS–
They are a temporary means of alerting employees of hazardous conditions or defective equipment. They are RED with WHITE or GREY letters. They are placed near electrical power equipment, ladders and other housekeeping tools.Eg. a vacuum cleaner with a frayed cord can read “do not start” or “out of service”.
Security System in Hotels
1. Video Surveillance Systems
2. Alarm Systems
a. Local Alarm
b. Contact Alarm
c. Remote Alarm
d. Fire Safety Alarm
3. Sprinkler Systems
4. Carbon Monoxide Detectors or Smoke Detectors
Q.6. List and describe licenses and permits required in opening an F&B outlet in a metro city.(10)
Licenses needed to open an F&B outlet in India.
Some are absolutely mandatory while others are optional in some states. Some license need to be procured even before starting construction so do begin early and keep in mind sometimes it takes time to get them. India has many states and many regulations so you might have to check with a law firm or lawyer specializing in hotels on all the legal requirement.
1. Fire Security Certificate
It is as of the date the most important of all the license. Without Fire NOC it is very difficult to get any other permission. It is mandatory to follow all fire safety guidelines and have proper fire security arrangements. A No Objection Certificate (NOC) has to be obtained from the Fire Department. Post your application, the inspection would be carried out and the decision will be taken by the officials of the Fire Department for the grant of the NOC.
2. Food Safety License
This is given by the Food Safety and Standards Association of India administrated by the Ministry of Health & Family Welfare, Government of India. This act was established in 2006 and lays downs standards for articles of food and to regulate their manufacture, storage, distribution, sale, and import to ensure availability of safe and wholesome food for human consumption. The FSSAI is a single point contact for all matters relating to food safety and standards. Please refer to the FSSAI Act to view the details of this act.
3. Health Trade License
This is issued by the Municipal Corporation or Health Department of the concerned state. The license gives permission to perform trade and business in items that have a direct effect on public health. By issuing this license the Municipal corporation certifies that your establishment complies with the hygiene and security standards essential for public health.
4. Eating House License
Eating House refers to any place to which the public are admitted, and where any kind of food or drink is supplied for consumption in the premises. This is provided by Licensing Police Commissioner of that city. You will have to refer to the Licensing Police Commissioner of that city to get specific details.
5. Liquor or Bar License
If you are planning to serve liquor then you must have this license. This can be obtained from the local Excise Commissioner of your city or region.
6. Lift Clearance
If your hotel is multi-storeyed and you will be operating a lift, you will have to get clearance for operating the elevator. Sometimes the permission has to be from the electrical inspector or the office of the Labour Commissioner of the city, to ensure that the lift operations comply with the safety norms.
7. Music License
If your outlet will be playing any recorded music or video, you will have to obtain a license in compliance to the Copyright Act of 1957 issued from Phonographic Performance Limited or Indian performing Right Society. Both PPL and IPRS are separate organizations who license different sets of rights in the use of music. You may need a license from both organizations. PPL works for the use of recorded music on behalf of record companies and performers, whilst IPRS works towards musical composition and lyrics on behalf of authors, songwriters, composers, and publishers. Please refer to PPL India and IPRS for further details.
8. Signage License
This license will be issued by the local civic body like the Municipal Corporation of your city.
9. Pollution Certificate
Pollution Control Committee of your city or region will be responsible for providing this license or NOC to ensuring that the establishment does not violate pollution norms. These rules have become very stringent and are very tough to get if your site is not following the standards as laid down in the guidebook. Make sure to integrate the recommendations at a design stage itself
10. Certificate of Environmental Clearance (CEC)
This is a permit required as a part of the Environmental Management Act under the Ministry of Environment and Forests for certain type of projects. An assessment is done to rule out any negative impact on the environment by the CEC authority post filling a questionnaire.
11. Shop and Establishment Act
The Shop and Establishment Act is regulated by the Department of Labour and regulates premises wherein any trade, business or profession is carried out. This act regulates areas such as working hours, rest interval for employees, opening and closing hours, closed days, national and religious holidays, overtime work, rules for employment of children, annual leave, maternity leave, sickness, and casual leave, etc. Shop & Establishment License can be obtained by applying to the State Chief Inspector of the Department of Labour.
12. Approval from the Weights & Measures Department
As per the Legal Metrology Act, 2009, you have to get models of weighing & measuring instruments approved from the Weights & Measures Department.
13. GST registration
The recent amendment to the GST has made it compulsory to apply for GST registration and to follow the process laid down to collect the tax. Registration is simple and online and there are many firms specializing in helping you to register for the same.
14. Trademark Registration
If you are planning to open a chain and are going to be investing a large amount of time and money into branding, it is advisable to obtain a trademark registration. Trademark registration provides ownership over the intellectual property created and helps in avoiding anybody copying the branding.
Q.7. Cyber space is a virtual world available to a vast majority. It is necessary to remember that internet is not a private network. Comment with reference to privacy on internet and cyber laws.(10)
Cyber law is any law that applies to the internet and internet-related technologies. Cyber law is one of the newest areas of the legal system. This is because internet technology develops at such a rapid pace. Cyber law provides legal protections to people using the internet. This includes both businesses and everyday citizens. Understanding cyber law is of the utmost importance to anyone who uses the internet. Cyber Law has also been referred to as the “law of the internet.”
Cybercrime and Cybersecurity
Areas that are related to cyber law include cybercrime and cybersecurity. With the right cybersecurity, businesses and people can protect themselves from cybercrime. Cybersecurity looks to address weaknesses in computers and networks. The International Cybersecurity Standard is known as ISO 27001.
Categories of Cyber Crime
Generally, there are three major categories of cybercrimes that you need to know about. These categories include:
1. Crimes Against People- While these crimes occur online, they affect the lives of actual people. Some of these crimes include cyber harassment and stalking, distribution of child pornography, various types of spoofing, credit card fraud, human trafficking, identity theft, and online related libel or slander.
2. Crimes Against Property– Some online crimes happen against property, such as a computer or server. These crimes include DDOS attacks, hacking, virus transmission, cyber and typo squatting, computer vandalism, copyright infringement, and IPR violations.
3. Crimes Against Government– When cybercrime is committed against the government, it is considered an attack on that nation’s sovereignty and an act of war. Cybercrimes against the government include hacking, accessing confidential information, cyber warfare, cyber terrorism, and pirated software.
Most of these types of cybercrimes have been addressed by the IT ACT of 2000 and the IPC.
Property
An important part of cyber law is intellectual property. Intellectual property can include areas like inventions, literature, music, and businesses. It now includes digital items that are offered over the internet. IP rights related to cyber law generally fall into the following categories:
Copyright- This is the main form of IP cyber law. Copyrights provide protection to almost any piece of IP you can transmit over the internet. This can include books, music, movies, blogs, and much more.
Patents- Patents are generally used to protect an invention. These are used on the internet for two main reasons. The first is for new software. The second is for new online business methods.
Trademarks/Service Marks- Trademarks and service marks are used the same online as they are in the real world. Trademarks will be used for websites. Service marks are used for websites that provide services.
Trade Secrets– Trade secret laws are used to protect multiple forms of IP. This includes formulas, patterns, and processes. Online businesses can use trade secret protections for many reasons. However, it does not prevent reverse engineering.
Privacy– Online businesses are required to protect their customer’s privacy. The specific law can depend on your industry. These laws become more important as more and more information is transmitted over the internet.
Employment– Some employee contract terms are linked to cyber law. This is especially true with non-disclosure and non-compete clauses. These two clauses are now often written to include the internet. It can also include how employees use their company email or other digital resources.
Defamation– Slander and libel law has also needed updating because of the internet. Proving defamation was not altered substantially, but it now includes the internet.
Data Retention- Handling data is a primary concern in the internet age. An area where this has become a big issue is in terms of litigation. In lawsuits, it is now common to request electronic records and physical records. However, there are no current laws that require keeping electronic records forever. This is not true for physical records.
Purpose of Cyber Law –
The purpose of cyber law is to reduce risk. This can be done in several ways. Some of the most effective risk reduction strategies of cyber law include the following:
- Cybersecurity Research and Development.
- Threat Intelligence.
- Improved Firewalls.
- The Use of Protocols and Algorithms.
- Authentication.
- Focusing on Cloud and Mobile Security.
- Cyber Forensics.
Another way cyber law can prevent cybercrime is by protecting the supply chain. Interruptions in the supply chain pose big security risks. This is especially true when equipment is allowed to be altered. Protecting the supply chain is key in preventing cybercrime.
Q.8. What is the need for laws and regulations in hotels and catering industry? Explain.(10)
With opening up of the Indian economy after 1991 and the adoption of globalization, there has been a steep rise in the operational activities of various sectors that were earlier very dormant. One of the best examples of this is the hospitality industry. One of the major parts of this sector is the hotel industry.
The expanding activities of the hotel industry have turned it into a multimillion-dollar industry. Hotel industry consists of restaurants, lodging places, theme parks, event planning, etc. and includes activities such as facility maintenance and direct operations including servers, porters, housekeepers, bartenders, kitchen keepers, etc. Such services that are provided by the hotels constitute to be the subject matter of laws that regulate the hotel industry.
Until recently, there were not many stringent requirements of compliance attached to these laws. Due to the rise in the number of cases of food poisoning, rising concerns, and public conscience, these laws now demand stringent compliance. Apart from regulating the areas mentioned above, hotels are also obliged to protect their customers from harms that are criminal in nature such as thefts, bodily harms, and even potential harms from terrorist groups.
Associations governing hotel industry
The industry associations that govern the working of hotels in India:
• The Federation of Hotels and Restaurants Association of India
• The Hotel and Restaurant Association of Eastern India
• The Hotel and Restaurant Association of Northern India
• The Southern India Hotel and Restaurant Association
• The Hotels and Restaurant Association (Western India)
• Hotel Association of India.
Importance of law and regulations in hotel & catering industry are-
1. Keeping Customers Safe
Food safety laws play a major role in the hospitality industry, and knowledge about how to clean and store food can keep your customers safe and help your business avoid lawsuits and fines. The many cases of food contamination in the news recently have demonstrated the difficulty in tracing the origin of tainted food, which means places that serve food must be vigilant about knowing their suppliers. Customers who get food poisoning from your food, whether you were at fault or not, are not welcome publicity. If your establishment is one of the many who welcome dogs on their patios, there are numerous laws governing practices you must follow to keep dining areas sanitary.
Other safety laws include the Hotel Fire Safety Law, which maintains a list of hotels that meet minimum fire safety guidelines. If your hotel follows these guidelines, federal employees can stay at your business, increasing your customer base, and customers can rest easy knowing that your hotel is invested in keeping them safe in the event of a fire.
2. Protecting Your Reputation
Knowledge of hospitality regulations protects business’s reputation. Of course unsafe or unsanitary conditions affect the reputation, but there are many other laws need to follow as well. For example, hotels have to provide access to disabled patrons, and if your business fails to comply, you could face lawsuits, protests and negative publicity.
Similarly, discriminating against people on the basis of sex, race, religion, disability status or age can draw unwanted negative attention. Staff members should be trained to understand what constitutes discrimination so they’re aware of their legal obligation to respect diverse workers and patrons.
3. Honoring Agreements and Fair Marketing
Workers in the hospitality industry may be members of unions, and some unions have specific agreements with employers governing wages, working conditions and benefits. The management staff needs to honor these agreements, as well as any contracts you’ve signed with customers, vendors and contractors. Similarly, hotels must adopt fair and honest marketing practices. Deceptive marketing is illegal. For example, Advertising an “as low as” price could be considered a form of “bait and switch” advertising if that price seems to never be available and customers are instead guided to higher-priced accommodations.
4. Record-Keeping for Hospitality Laws
Records could become quite valuable resources if you need to prove adherence to any of the numerous hospitality laws. Food businesses have to maintain tip sheets indicating the tips employees receive at tip-out, and all hospitality businesses must keep accurate and up-to-date employment agreements and payroll tax paperwork. Employees who know and understand the hospitality laws can keep more accurate records and will be less likely to throw away or delete important documentation. Without proper record-keeping, business could get into trouble with a variety of governmental agencies, over or underpay employees and even miss out on important tax deductions.
5. Employee Welfare
Service providers ought to be well-versed with all labor laws, given the unique employment attributes in the hospitality industry. Unique challenges exist due to the nature of the work and the variety of employees that exist in the industry. There are permanent and seasonal workers regulated differently under the law. The hospitality industry also takes on underage workers who work part-time and have specific protections under the law. Considering that the hospitality industry tends to operate 24 hours a day, throughout the year, entrepreneurs and managers have to guard against violation of wage and overtime laws, which guard against overworking and underpaying employees. It is also important to know about the occupational health and safety laws that protect employees at work.
6. Client Service
Operators in the industry are expected to ensure clients’ welfare and are legally liable when they fail to meet it adequately. Client services range from food preparation and service; ensuring general hygienic conditions, and offering adequate security to prevent criminal activity, which includes assuring the safety of guests and protecting their privacy and confidentiality. Operators need to know their legal duties and refrain from placing clients at risk of injury, illness, embarrassment or loss due to ignorance or negligence.
7. Risk Exposure
Hospitality industry service providers face the risk of lawsuits based on breach of contract arising out of relationships with suppliers and guests, tortious claims such as when a guest gets injured due to negligence, and bankruptcy when the business is not making enough to pay the bills. The industry is also vulnerable to risks arising out of gambling and liquor licensing laws that regulate when and where alcohol can be served and the legal drinking age, as businesses can be held liable even when it is their guests who breach the law. Therefore, industry entrepreneurs and managers need awareness of laws to avoid exposure to risk that can lead to disruption or even closure of the business.
8. Legal Compliance
State and federal laws prescribe standards for every industry, and in the hospitality realm, there are a number of relevant laws that service providers must follow. Laws on guest-tenant relationships, maintenance of public health through the creation of smoke-free zones and food hygiene standards apply directly to the industry. Legislation on consumer safeguards, such as protection from misrepresentation and false advertising, as well as disability discrimination due to lack of access, also affect the industry. Service providers require comprehensive knowledge of all applicable laws to effectively manage all the legal issues that arise in the course of operating their business.
Q.9. Briefly explain any two(2×5=10)
a. Marketing policies in managing the various lodging properties.
A marketing policy is similar to a business code of ethics. Although some are more specific than others, each addresses aspects of responsible marketing the business considers most important. For example, the Friendly’s Ice Cream marketing policy focuses mainly on nutrition guidelines and guidelines for marketing to children, while Coca-Cola’s marketing policy, which also focuses on children, includes guidelines for the different marketing channels it uses as well as for product placement in schools and youth organizations.
1. Social Media Marketing
Social media marketing is one of the most popular and effective types of marketing strategies. And it’s not hard to understand why when more than 2.8 billion people use social media.
That’s approximately 37% of the world’s population!
This huge number includes people from all age groups. Even children as young as 10 years old have started to use social media regularly.
Add to that the fact that all the reputable digital marketing news sites support social media marketing. SMM is almost guaranteed to improve your level of engagement and brand awareness.
2. SEO
Search Engine Optimization (SEO) simply refers to how you can get free and organic traffic to your website. Basically, if you get to the top or at least page one of the SERPs, then you’ve succeeded at SEO.
3. PPC or Pay per Click
PPC is one of the costlier types of marketing strategies, but the return is worth the cost. Basically you pay a fee each time one of your ads is clicked.
But one of the main reasons for the widespread usage of PPC advertising is how much it’s promoted by Google, Bing, and Yahoo. It’s easy for these reputable companies to gain the trust of business owners.
4. Email Marketing
Email marketing is one of the types of marketing strategies that work far better than its traditional counterpart. For one, gathering email addresses is much easier than gathering mailing addresses. And two, the costs are much lower because there are no printing and postage costs with email marketing.
5. Content Marketing
Content marketing is different than the other types of marketing strategies. It’s different than traditional advertisements too. And it’s also different from the humorous posts on social media.
Content marketing can influence someone’s thoughts without them even knowing it. But it does require a lot of time, dedication, as well as some skill in writing.
b. Site selection economies.
Site selection is the process of examining multiple options and assessing their relative advantages and disadvantages. Site selection comes after the needs assessment is completed. If you select a site before the needs assessment, you may compromise on key design aspects due to site limitations. The site selection process involves the following interrelated tasks:
- Assemble an experienced site selection team. It should be a sub-team with representation from the project development team.
- Review site selection criteria, identify a site, and devise a plan for your project.
- Initiate the loan process with a lender.
Importance of Site Location
- Know about the neighbourhoods of your potential sites.
- Avoid developing a site plan too quickly.
- Before purchasing a piece of property or a building, confirm that the zoning allows your organization to occupy that site. This should be investigated during the due diligence period prior to closing on the purchase. Other due diligence items include verifying that adequate public utilities are available, determining that there are no environmental hazards on the site, and conducting a geotechnical (soils) investigation if new construction is planned.
Site Selection Criteria
(1) Location
Site should be located in the community in which the organisation is able to serve.
Site should be accessible to target demographics market.
Site should be accessible by public transportation and convenient.
Site should be visible to passers-by on foot or in vehicles.
(2) Site/Land
Access to utilities (e.g., electricity, sewer, water, gas, and phone)
Adequate space for parking.
Soil should be conditions conducive to the project’s structural needs.
(3) Building
Size should be adequate, and it should accommodate future growth.
Condition of all major systems (e.g., plumbing, electrical, and heating/ventilation)
Proper drainage in the basement.
(4) Costs and Renovations
Preliminary costs for improvements should be reasonable
(5) Legal and Timing Issues
Calculations to Assist Site Decision-Making
Cost Per Square Foot (cost psf) is the total cost divided by the total square feet of space.
Cost of Improvements is based on the preliminary budget for a potential site. The cost of improvements should include both hard costs and soft costs.
Rent Per Square Foot (rent psf) is annual rent divided by total square feet. The square footage used is the net leasable area. If you are planning to lease space, be sure to understand what expenses you will pay versus expenses the landlord will pay. Also, factor in one-time costs to improve the property so it is ready for occupancy. Some landlords provide a “tenant improvement allowance,” which is factored into the rent psf calculation.
The Site Acquisition price for a land purchase may be quoted on a per-acre or per-square-foot basis. It is typically quoted on a per-square-foot basis in urbanized locations.
c. Sanitation requirement in hotels.
Working in any food processing industry entails keeping up with target production for the day and working vigorously to make sure the food processed is on par with the standards for customers. Also, it requires that the workplace, the food being processed, and the whole workforce comply with the food safety and hygiene practices.
With the huge amount of food processed in hotels and hospitality, and large workforce to monitor, food safety is sometimes hard to track. However, it can be effectively done by educating workers on what to do and what is expected of them. Also, they must have a complete understanding about the implications if they do otherwise.
5 Essential Food Safety and Hygiene Practices
1. Wear Proper Clothing and Footwear
It always important that employees wear garments which are suitable for their job, which in this case is the food processing industry. Wearing proper clothing and footwear for food processing is the best way to maintain the cleanliness of food which is particularly important when working in an industry such as a hotel where standards need to be kept high.
You must also ensure that you have hair and facial hair protection on at all times when cooking and preparing food as this is another basic hygiene practices which must be followed at all times.
2. Keep Your Hands Clean
Keeping your hands clean is an absolute must in any industry as it is a daily process for us all. Predominantly, keeping your hands clean in food processing within hotels is required as it can prevent the spread of diseases and hotels to ensure clean environments.
Cleaning your hands is a way for you to combat possible bacteria and contaminating agents inside the workplace. It is also a basic method to avoid diseases coming from other workers in the area.
3. Ensure that the Tools and Equipment are Clean and Sanitised
Another practice which must be kept in mind is ensuring that the tools and equipment used within food processing in hotels are clean and sanitised. Usually, bacteria are present in tools and equipment that are not cleaned and sanitised regularly, particularly in such a big industry whereby tools and equipment are continuously used.
4. Make Use of Food Safety Equipment and Metal Detectable Equipment
Making use of metal detectable and food safety equipment in the kitchens of hotels are standard measures followed by food manufacturing industries to make sure there are no contaminants being brought into the workplace. The use of detectamet pens can help maintain safety in any food industry, as well as pharmaceutical, packaging and beverage industries.
5. Proper training of staffs.
Effects of Not Practicing Proper Food Safety and Hygiene in Hotels
• Food Contamination
• Spread of Sickness and Diseases in the Workplace
Q.10. Write short notes on any four:(4×2.5=10)
a. Casual upscale dining
A casual dining restaurant (or sit down restaurant) is a restaurant that serves moderately priced food in a casual atmosphere. Except for buffet-style restaurants, casual dining restaurants typically provide table service.
Casual dining comprises a market segment between fast-food establishments and fine-dining restaurants. Casual-dining restaurants often have a full bar with separate bar staff, a full beer menu and a limited wine menu. In Italy, such casual restaurants are often called “trattoria”, and are usually independently owned and operated.
Upscale Casual dining serves one to three meals a day. Guests are seated and served by wait staff in booths or tables. Table service and dining ambiance are more casual than Fine Dining, but more formal than Family Casual. The menu offers a selection of items featuring familiar or regional favourites. Children’s menus may be available.
Some standards-
1. Building exterior is well-maintained and surfaces are treated to protect against deterioration. Roofs, gutters, and downspouts are well-maintained and clear of obstructions. Rooftop ventilation and other systems are well-maintained and operational.
2. Background music and PA systems are operational. Music is played at an appropriate level for customers and cannot be heard in adjoining areas. Live music or entertainment is appropriate.
3. Food is appropriately plated, garnished, and arranged, Plating is creative and balanced.
b. Service delivery in F&B Service
Food and beverage services sector contributes a great deal to the profits in hospitality industry. With the increase in importance of business meetings, a range of personal and social events, a large number of customers visit catering establishments frequently. The food and beverage professionals tirelessly work to intensify customers’ experience through their service.
The F&B Services providing businesses deliver food and beverages to their customers at a particular location (on-premise) such as hotel, restaurant, or at the customer’s intended premises (off-premise).
The service is intangible, it is all actions & reactions that customer perceive from what they have purchased and service is ability to provide assistance.
An instance of contact or interaction between a customer & a firm (through service, product or visit) that gives the customer an opportunity to form or change an impression about the firm.
Parts of service delivery
● Organisation orientation
● Competence of staff
● Training of staff
● Verbal skills
● Interpersonal skills
● Personalisation
● Level of customer concern
Future trends in service delivery
● Futureof hospitality industry is completely technology based.
● More & more of the gadgets, equipments & machines will be used for easy service operations.
● But personalisation of service will always have its own place.
● More use of technology.
● Modern equipments & techniques.
● Cost effective.
● Optimum utilisation techniques of resources for service delivery.
● Efficient guidelines of service delivery to meet customer expectations.
c. ISO standards
ISO (International Organization for Standardization) is a worldwide federation of national standards bodies.
ISO is a nongovernmental organization that comprises standards bodies from more than 160 countries, with one standards body representing each member country.
BIS(Bureau of Indian Standard) is a founder member of International Organisation for Standardization (ISO). It represents India in the International Organization for Standardization (ISO).
Member organizations collaborate in the development and promotion of international standards for technology, scientific testing processes, working conditions, societal issues and more.
The organization has its headquarters in Geneva, Switzerland, where a central secretariat oversees operations. ISO was founded in the year 1947.
ISO published its first standard, in 1951. The standard is now known as ISO 1:2016. As of 2018, ISO had published more than 22,000 standards.
Popular standards
Some of the most popular ISO standards include:
1. ISO 9000 Quality management
2. ISO 14000 Environmental management
3. ISO 26000 Social responsibility
4. ISO 50001 Energy management
5. ISO 31000 Risk management
6. ISO 22000 Food safety management
7. ISO 27001 Information security management
8. ISO 22000 HACCP
9. ISO 20000: IT Service Management
d. Franchising
Franchising is a well-known business strategy. Franchising is a form of contractual agreement in which a franchisee (a retailer) enters into an agreement with a franchisor (a producer) to sell the goods and services for a specified fee or commission. The retailer through his outlet distributes the goods or services.
It brings together the title-holder of recognized merchandise with another business. This strategy can be opted by small businesses by having a brand name of a well-known company associated with it.
For small business who cannot afford for much finance and capital investment for a business startup, franchising will be beneficial. Buying a franchise can be a shortcut to success.
Advantages of buying a franchise
The following are some of the advantages of buying franchise.
1. Higher success Rate: When entrepreneurs buy a franchise, they buy an established concept that has been successful. Franchisees stand a much better chance of success than people who start independent businesses.
2. Assistance: When entrepreneurs buy a franchise; they get all the equipment, supplies and instruction or training needed to start the business.
3. Cost reduction: Franchisor can afford to buy in bulk and pass the savings to franchisees. Inventory and supplies will cost less than running an independent company. For example, running a courier company on own could be a difficult task. But by being a franchisee of Overnite Express, the franchisee can save money.
4. Star Power: Many well-known franchises have national brand-name recognition. Buying a franchise can be like buying a business with built-in customers. For example, buying a franchise of Aptech will help to attract customers easily.
5. Profits: A franchise business can be immensely profitable. The probability for a small business to succeed is high as they have the backup and support of well established big business enterprises.
6. Marketing assistance: When a business is associated with a franchisor then the big-business themselves help in corporate marketing of the goods of the small industry or business they are providing support for.
7. Staff training: The franchisor provides all the necessary training to the franchisee or small business staff and provides additional resources and decision-making capabilities to a small business.
Disadvantages of buying a franchise
The following are some of the disadvantages of buying franchise.
1. Control: Some franchisors exert a great degree of control. No decision can be taken by the franchisees without consulting the franchisor.
2. Ongoing Costs: Besides the original franchise fee, royalties, a percentage of franchise’s business revenue, will have to be paid to the franchisor each month.
3. Lack of Support: All franchisors do not offer the same degree of assistance in starting a business and operating it successfully. Assistance is provided only at the time of starting the business.
4. Expensive: Buying a well-known franchise is very expensive. Entrepreneurs must have the ability to arrange the necessary finance.
5. Time consuming: Lot of time is required while selecting a franchise. A complete and thorough research is required to select the right franchise and to determine whether it would work for the business or not.
6. Misunderstanding: Franchise is a complex procedure and disputes may arise between the franchisee and franchisor.
e. Trademark
A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks. The trademark owner can be an individual, business organization, or any legal entity.
A trademark may be located on a package, a label, a voucher, or on the product itself. For the sake of corporate identity, trademarks are often displayed on company buildings. It is legally recognized as a type of intellectual property.
A trademark identifies the brand owner of a particular product or service. Trademarks can be used by others under licensing agreements.
The unauthorized usage of trademarks by producing and trading counterfeit consumer goods is known as brand piracy.
The owner of a trademark may pursue legal action against trademark infringement. Most countries require formal registration of a trademark as a precondition for pursuing this type of action.
A trademark may be designated by the following symbols:
• ™ (the “trademark symbol”, which is the letters “TM” in superscript, for an unregistered trademark, a mark used to promote or brand goods)
• ℠ (which is the letters “SM” in superscript, for an unregistered service mark, a mark used to promote or brand services)
• ® (the letter “R” surrounded by a circle, for a registered trademark)