BUSINESS INNOVATIONS IN RELATION TO TOURISM IN SAGADA, MOUNTAIN PROVINCE
ARRIANE E. CARREON
A THESIS SUBMITTED TO THE COLLEGE OF AGRICULTURE, BENGUET STATE UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE
BACHELOR OF SCIENCE IN AGRIBUSINESS (ENTERPRISE MANAGEMENT)
2 APRIL 2009 CA-UR Form 10
File No. AGRIB 2009-6193-578 Benguet State University COLLEGE OF AGRICULTURE La Trinidad, Benguet
This thesis, titled “BUSINESS INNOVATIONS IN RELATION TO TOURISM IN SAGADA, MOUNTAIN PROVINCE,” prepared and submitted by ARRIANE E. CARREON for the degree BACHELOR OF SCIENCE IN AGRIBUSINESS (Enterprise Management) is hereby accepted.
DARLYN D. TAGARINO Adviser and Chairperson, Advisory Committee Date Signed: __________
DAVID JOSEPH L. BOGNADON Member, Advisory Committee Date Signed: ______________
LUKE E. CUANGEY Member, Advisory Committee and Department Chairperson Date Signed: ______________
JANET S. LUIS Dean
3 Dated Signed: _________ ACKNOWLEDGEMENT Sincerest and grateful acknowledgement should be forwarded to those who helped me make this piece of work possible. First and above all, I have the duty to bring all the glory and praises to God for His blessings and guidance for giving me strength, patience, courage to face trials in my schooldays, and for the wisdom and knowledge to learn the essence of education. To my adviser Dr.
Darlyn D. Tagarino, for her constant encouragement,
guidance, shared knowledge, for being patient and having time to improve my manuscript, for her suggestions, and assistance all throughout the study. To Prof. Luke E. Cuangey, chairman of the Department of Agricultural Economics and Agribusiness Management and all DAEAM faculty members for the additional suggestions, corrections and comments for the improvement of the study. This study may not have been accomplished without the presence of respondents who provided the needed information. May the Lord continuously bless you more. Warmest appreciation and special thanks to my friends most especially to Nova Lyda Dogao, Melanie June Cadalig, Lee Omaweng, Jonathan Gaong, Melit Bangsoyao and Jeri Capuyan, Darwin Docallas. Thank you for the unbroken and unforgettable friendship. Without your encouragement, support, funny jokes to remove stress, comfort, prayers, companionship and kindness, this piece of work may not succeed. Countless thanks are also extended to all of my cousins and friends most especially to Marjorie Esilen, Evelyn Gay Docallas, Kim Floyd Suvilla, Jovane Pastor,
4 Ever Grace Anniban, Donna Jean Ramos, Mary Ann Petinez, Donwin Ngaya-an, Edmer Sawadan, Christine Lopez, Mark Anthony Que, Raybyrd Gegway for their continuous support and companionship to accomplish this research. Finally, I wish to dedicate this book to my beloved family. To my parents, Mr. Johnson Carreon and Ms. Irene Yampan Esilen; to my brother and sister; Arby and Arah; to my nephews and nieces. Without their unending love, encouragements, concerns, prayers, financial support and criticisms this book would not have been possible.
ARRIANE ESILEN CARREON
5
TABLE OF CONTENTS Page Title Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Approval Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
Table of Contents . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
v
List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
vii
List of Figure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ix
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
x
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
REVIEW OF LITERATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
RESULTS AND DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Socio-Demographic Profile of the Respondents . . . .. . . . . . . . . . . . .
11
Legal form of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
Year Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Start of Inns and Lodging Houses Business . . . . . . . . . . . . . . . . . . .
14
Reason for Engaging in the Inn and Lodging Houses Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Original Set-up of the Inn and Lodging House . . . . .. . . . . . . . . . . . .
15
Start of the Restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
6 Reasons for Engaging in the Restaurant Business . . . . . . . . . . . . . . .
16
Original Capacity of the Restaurant . . . . . . . . . . . . . . . . . . . . . . . . . .
17 Page
Number of Enterprises Introducing Innovations and Types of Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Type of Innovations Introduced by the Restaurants . . . . . . . . . . . . . .
19
Reasons for the Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Effects of Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Local Ordinances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Key Factors Associated with Innovations of Respondents . .. . . . . . .
23
SUMMARY, CONCLUSIONS AND RECOMMENDATION . . . .. . . . . . .
26
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
LITERATURE CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
APPENDIX . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
A. Letter to Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
B. Interview Schedule (Inns and Lodging Houses) . . . . . . . . . . . . . .
30
C. Interview Schedule (Restaurant) . . . . . . . . . . . . . . . . . . . . . . . . .
32
7 LIST OF TABLES Table No.
Page
1 2
Distribution according to the socio-demographic profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distribution according to legal form of business .. . . . . . .
3 13
Distribution according to the year business started . . . . . . . .
4
Distribution according to how the inn and lodging houses started .....................................
11 12
14 5 6 7 8 9 10 11
12 13 14
Reason for engaging the inn and lodging house business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Distribution of inn and lodging houses respondents according to the number of original rooms . . . . . . . . . . . . . .
15
Distribution of respondents according to how did restaurant started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Distribution according to the reason for engaging in the restaurant business . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Distribution according to the number of original copy of the restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Distribution as to whether innovations were introduced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Distribution of respondents according to type of innovations introduced by the inn and lodging houses establishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Distribution according to type of innovations introduced by the restaurant establishments . . . . . . . . . . . . . .
20
Distribution according to the reason for innovations by the type of establishments . . . . . . . . . . . . . . . . . . . . . . . . .
21
Distribution according to perceived effects of the
8 innovations by the type of establishments . . . . . . . . . . . . . . . Table No.
22 Page
a. Distribution of respondents according to the local ordinances passed and being implemented in Sagada that encouraged the respondents to innovate . . . . ..................................... 23 A. Distribution of respondents according to the key factors associated with the innovations of the entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
9 TABLE OF FIGURE
Figure No. 1
Page Paradigm showing the relationship of variables . . . . . . . . . .
10
10 Bibliography CARREON, ARRIANE E. APRIL 2009. Business Innovations in Relation to Tourism in Sagada, Mountain Province. Benguet State University, La Trinidad, Benguet. Adviser: Darlyn D. Tagarino, PhD Keywords: BUSINESS INNOVATIONS IN RELATION TO TOURISM ABSTRACT This study was conducted to determine how tourism-related business establishments in Sagada evolved; identify the innovations introduced by the establishments; and describe some key factors that were associated with the innovations. Entrepreneurs of 16 inn and lodging houses, 6 inns and lodging houses with restaurants, and 9 restaurants were interviewed in this study totalling of 31. The data were gathered through the use of interview schedule and supplemented by personal observations. Most of the businesses were established during 2001-2005. This was the period when tourism was observed to have boomed in Sagada. Most of the inn and lodging houses were actually home expansions and the restaurants started from being small canteens. The main reason for engaging in the respective business was to gain income or profit with the influx of the tourists. Majority of inn and lodging houses started with 5-10 rooms while restaurants originally started with seating capacities of 11-15 persons. The major innovation introduced by the inns and lodging houses is improvement of facilities and by the restaurants is better ambience. The major reason for innovating is
11 to satisfy the needs of guest and customers. The key factors associated with the innovations of the entrepreneurs are peace and order, and the tourist themselves. Conclusions Based on the findings, the following conclusions are derived: 1. The growth of business establishments in Sagada is tourism related. 2. Tourism encouraged the introduction of innovations by the establishments 3. Innovations that were introduced centered on improving the facilities and services.
4. Peace and order is the key factor in encouraging the entrepreneurs to introduce innovations. Recommendations Based on the findings and conclusions the following recommendations are made: . 1. The growing tourism industry in Sagada should be encouraged by providing support for the entrepreneurs to continue introducing innovations. Tie-ups with agencies like the Department of Trade and Industry, and the Department of Tourism should be facilitated by the local government as well as by the entrepreneurs themselves. 2. The local government of Sagada should maintain the peace and order that is conducive to tourism and to the introduction of innovations. 1. The tourists should be guided accordingly to the local ordinances such as curfew hour, waste management, prohibited drugs and the do’s and don’t’s.
12 INTRODUCTION Background of the Study In the early 1970’s, only a few tourist mainly missionaries and the more adventurous, young and energetic, curious and hippie styled Filipinos from the lowlands visit Sagada. The tourism boom started in the early 1980’s when a phenomenal number of Europeans flocked to this mountain hideaway. The people soon got used to the presence of tourists visiting the town. Sagada had engaged in the tourism business in its own way. In the early 1990’s, when the Department of Tourism issued thrusts and development had been a result of direct consultations between the tourism council and the Sangguniang Bayan from 1993-1994. With the advent of tourism, hotels, restaurants, gift shops, and hodgepodge stores were established to meet the fast growing needs of the tourism industry. Innovation is an ability to develop and introduce new product changes in the way goals and services are produced and in the way they are distributed to final users. New products and services innovation is conducted for a number of reasons such as: to establish sales, to contribute to enterprise growth or to reduce risk through diversification (Dagupen et al., 2000). True innovation and creativity-drive competition, which in turn contributes to growth of income and economy. Creativity together with comparative advantage thinking, unique local knowledge, and increased voluntary exchange are the key elements of an entrepreneurial culture (Urban and Hauser, 1993). Innovation may come by defining a “new” product by identifying what is actually new or unique in an idea. Firms are constantly looking for new markets to exploit in order to increase profits and make more effective use of their resources. Other firms are
13 simply changing one or more of the marketing mix elements to give old products a new image (Hisrich et al., 2008) Statement of the Problem The study will try to answer the following questions: 1. How did the business establishment catering to the tourist evolve? 2. What are the innovations of the entrepreneurs in their products and services? 3. What are the key factors associated with the innovation of the entrepreneurs in their products and services? Objectives of the Study The study aimed to: 1. To determine how the business establishment catering to tourism in Sagada evolve; 2. To find the innovations of the entrepreneurs in their products and services; and 3. To identify the key factors associated with the innovation of the entrepreneurs in their products and services.
14 Scope and Limitations The study was conducted in the municipality of Sagada, Mountain Province. The study will delimit on the innovations of entrepreneurs in their products and services. A census of different business was done. Fourteen, inn and lodging houses, six, inn and lodging houses with restaurant and nine, restaurants with the total of thirty one (31) respondents. Importance of the Study Today, enterprises are seeking to commercialize their technologies to face a dynamic set of challenges including people’s attitudes and values. The demand for products with better, faster, and using cheaper technology products is a dilemma that few enterprises have successfully overcome. Although many enterprises have successfully commercialized incremental innovations on existing technologies, they have been far less successful in bringing radical innovations or break through products to market (Dale, 1978). This study will help the entrepreneurs increase their market share, stay competitive and make a profit for the enterprise. It will differentiate the selected enterprises and entrepreneurs according to innovations that were introduced. Finally, this study will contribute to understand how tourism in Sagada can be further encouraged through the promotion of products and services innovations.
15 REVIEW OF LITERATURE
Innovation Innovation deals with process, products and services and technology (Drucker, 1985) has to be implemented to lead to mark to a marketable product, an entrepreneur is a person of ideas and actions who looks constantly for new product and market opportunities. New business creation has a significant impact on economic growth, innovation, and job creation (Reynolds et al., 2004). Since David Birch’s 1979 study of the impact of new a small firms in creating new jobs, a considerable body of evidence has been generated that supports his conclusion that small forms are the major source of employment growth in the U. S. economy (Reynolds and White, 1997). Entrepreneurial activity provides profound positive benefits across an important set of measures of social and economy well-being, technology, when compared to service-producing or goodproducing (Boden, 2000). More money or any other asset, idea should be the first investment of anybody who seeks to be entrepreneur. Indeed, (Damaso, 1982) said that business starts and proceeds with the process of ideation of thinking things through carefully, of asking very fundamental questions and giving the clearest answers to them, of organizing ideas so that they can easily be translated into effective action. Although entrepreneurs contribute so much to the society, we know little them as people. We can see the result of entrepreneurial activity in the form of new business and innovations, but we have limited information on how these new businesses actually came into existence (Reynolds et al., 2004).
16 The problem with exposing new concepts to scientific analysis is they cannot easily be made directly applicable in model building and theory development. Cumming’s (1998) historical overview of definitions of innovation demonstrates well that there is a long way from Zuckerman’s definition of a series of technical, industrial and commercial steps stressing creativity that shapes something into products and services, and the belief that invention only becomes innovation if succeeds in than marketplace. Creativity is an element of innovation management (Euram Conference, 2002). Ulign and Weggemen (2001) also reviewed some definitions within the frameworks of innovation management; innovation is creating something new and implementing it successfully at a market. Key Factors about Innovation As defined by Gow, an innovation is “an idea, a technique, or a device that was new to the adopting body, no matter whether is was something completely new to the world or something borrowed in whole or in part”. He adds “most innovations either reflect a desire of political leaders for greater control of spending, administration, or bureaucrats, or some outside demand for changes” Brillantes, 2003). A hospitable policy environment, the constitution guarantees the autonomy of local governments. This was operational zed with the promulgation of a Local Government Code. A triggering crisis, innovations were made in response to a crisis, say environmental degradation, floods, etc. Pushed against the wall and confronted with a crisis, various stakeholders in the society, whether government or civil society, became creative and innovative.
17 Aggressive civil society, the role of civil society in bringing about and sustaining innovation must be recognized. Inadequacy of financial resources, led local authorities to think of an additional alternative ways of generating revenues. Response to a demand for specific basic service, became creative in response to a pressing basic need that they simply must address. Attendance in local and international training, participation in seminar, workshops, etc., where the local chief executive was exposed to new theories and new ways of doing things have also led to innovative. National programs, addressing specific basic needs. Initiated by the university or local academic institution, being the traditional seat of knowledge. Aggressive local government, the political leadership took the initiative in addressing felt or articulated needs in the polity. Aggressive leadership and commitment on the part of the formal political system, the government, led to innovation and sustained it (Brillantes, 2003).
18 METHODOLOGY Locale and Time of the Study The study area covered businesses in Sagada, Mountain Province, specifically in the following barangays: Poblacion, Nangonogan, Lower and Upper Patay, and Dagdag. These businesses are registered and assisted by the Department of Trade and Industry (DTI) and accredited by Department of Tourism (DOT). This study came up with a profile of the business innovations in Sagada, Mountain Province during the period of December 2008. Respondents of the Study The respondents of the study were the managers or owners of the following types of establishments in Sagada, Mountain Province. The complete lists of the establishments covered were as follows: B. Inns and Lodging House 1. A7 House
10. Green House Inn
2. Alapo’s View Inn and Café
11. Home Stay Transient
3. Alfredo’s Inn
12. Pines View Inn
4. Dap-ay Mabbay 5. Far Ants Inn
13. Residential Lodge 14.
Rock Inn and Café (Rock
Farm) 6. Ganduyan Inn 7. Gecko Inn 8. George Guest Home
15. Sagada Lemon Pie House 16. Sagada Pension House 17. Sagada Pension House
19 9. St. Joseph’s Rest House C. Inns and Lodging Houses with Restaurants 1. Ganduyan Inn and Restaurant 2. Mapiyaaw Inn and Restaurant 3. Masferre Country Inn and Restaurant 4. Olahbinan Guesthouse and Retaurant 5. Sagada Guesthouse and Restaurant 6. Sagada Igorot Inn and Restaurant D. Restaurant 1. Alfredo’s Restaurant 2. Bilig Café and Restaurant 3. Shamrock Restaurant 4. St. Joseph Restaurant 5. Yoghurt House 6. Sagada Guest Restaurant 7. Alfred’s Restaurant 8. Phil-Kor Restaurant 9. Greenhouse Restaurant Data Gathered The researcher used an interview schedule to generate data for the research. The interview schedule will be based on the objectives and the conceptual framework.
20
Data Analysis The data obtained were subjected to descriptive analysis. Frequency distributions, percentages and appropriate measures of central tendency used. Conceptual Framework Business innovations specifically of products and services are influenced by the entrepreneur, the enterprise and external factors. The expected entrepreneur variables are education and exposure, of the manager, training, age and civil status. These are assumed to have a positive influence on business innovations. Enterprise factors such as types of business and capitalization affects business innovations positively as well. External factor such as local ordinances, peace and order, tourism programs, and tourism statistics influence business innovations. Ordinances that are friendly to business and tourism will encourage business innovations. Peace and order and various tourism programs that may be sponsored will also affect the introduction of business innovations positively.
21
A. ENTREPRENEUR FACTORS -Education and exposure of Management -Training -Age
BUSINESS INNOVATIONS
-Civil Status -Products and services B. ENTERPRISE FACTORS -
Types of Business
-
Capitalization
C. EXTERNAL FACTORS -
Local Ordinances
-
Peace and Order
-
Tourism Programs
Figure 1. Paradigm showing the relationships of variables
22 RESULTS AND DISCUSSION Socio-Demographic Profile of the Respondents Table 1a shows that majority (32.25%) of the respondents in terms of age bracket that are engaged in business are 41-50 years. It indicates that most of the respondents are in the middle age bracket. Most of the respondents are married (74.19%), and are females (70.97%). Among the entrepreneurs interviewed, majority of the respondents (80.65%) either reached or finished college. Table 1. Distribution according to the socio- demographic profile INN AND LODGING HOUSES
INN AND LODGING HOUSES WITH RESTAURANTS
RESTAURANTS
TOTAL
PARTICULARS
Age Bracket 20-30 31-40 41-50 51-60 61-80 TOTAL Civil Status Single Married Widower TOTAL Sex Male Female TOTAL
F
P (n=16)
F
P (n=6)
F
3 3 7 1 2
18.75 18.75 43.75 6.25 12.50
0 0 3 2 1
0 0 50.00 33.33 16.67
1 2 3 2 1
16
100.00
6
100.00
9
2 12 2 16
12.50 75.00 12.50 100.00
0 6 0 6
0 100.00 0 100.00
2 5 2 9
4 12 16
25.00 75.00 100.00
2 4 6
33.33 66.67 100.00
3 6 9
P (n=9)
F
P (n=31)
11.11 22.22 33.33 22.22 11.11
4 5 10 5 4
12.90 16.12 32.25 16.12 12.90
100.00
31
100.00
22.22 4 55.56 23 22.22 4 100.00 31
12.90 74.19 12.90 100.00
33.33 66.67 100.00
9 22 31
29.03 70.97 100.00
23 Table 1. Continued . . . INN AND LODGING HOUSES
INN AND LODGING HOUSES WITH RESTAURANTS
RESTAURANTS
TOTAL
PARTICULARS F
P (n=16)
F
P (n=6)
F
Elementaryhigh school level
3
18.75
1
16.67
2
College level
13
81.25
5
83.33
16
100.00
6
100.00
P (n=9)
F
P (n=31)
22.22
6
19.35
7
77.78
25
80.65
9
100.00
31
100.00
Educational Attainment
TOTAL
Legal Form of Business As shown in the table 2, majority of the entrepreneurs are single proprietorships. The table shows that the entrepreneurs preferred to manage their own business independently. New business creation has a significant impact on economic growth, innovation, and job creation (Reynolds et al., 2004). Table 2. Distribution according to legal form of business
LEGAL FORM OF BUSINESS
Soleproprietorship Partnership TOTAL Year Started
INN AND LODGING HOUSE F P (n=16)
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16)
RESTAURANTS F P (n=16)
F
TOTAL P (n=16)
14
87.50
5
83.33
8
88.89
27
87.09
2 16
12.50 100.00
1 6
16.67 100.00
1 9
11.11 100.00
4 31
12.90 100.00
24 Almost 42% of the business enterprise came to being during 2001-2005. This period may indicate the booming of tourism in Sagada. From the responses of the interviewed entrepreneurs, there is indication that tourism as a business in Sagada started in the 1980’s. This is shown in Table 3. Table 3. Distribution according to the year business started
YEAR STARTED
INN AND LODGING HOUSE F P (n=16)
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16)
RESTAURANTS F P (n=16)
F
TOTAL P (n=16)
1980-1985
3
18.75
0
0
0
0
3
9.67
1986-1995
3
18.75
1
16.67
1
11.11
5
16.13
1996-2000
3
18.75
2
33.33
2
22.22
7
22.58
2001-2005
6
37.50
3
50
4
44.44
13
41.94
2006-onwards TOTAL
1 16
6.25 100
0 6
0 100
2 9
22.22 100
3 31
9.67 100
25 Start of Inns and Lodging Houses Business Table 4 shows that (50%) of the inns and lodging house respondents started their business by expanding their own houses to add rooms for rent to transients. These were initially students, nurses and interns of St. Joseph Hospital. The rooms were intended only for stay-ins. Eventually, expansions of additional rooms were done to accommodate more and more of the tourist that started to come. The emergence of the “inns and lodging” concept for the tourist led to the construction of facilities solely for the purpose. It is notable that 4 (18.18%) of the inns and lodging houses started with restaurants already part and parcel of the operations. Reasons for Engaging in the Inn and lodging Houses The major reasons for engaging in the Inn and lodging houses business were as follows: majority (90.90%) said is it to augment family income and be a source of livelihood. About (68.18%) said it is to meet the demand of the tourist. Another (45.34%) went into the business in order to apply their skills. Table 4. Distribution according to how the inn and lodging houses business started PARTICULARS Expansion of the family housing
FREQUENCY 11
PERCENTAGE 50.00
Lodging
7
31.81
Started with business right away
4
18.18
TOTAL
22
100.00
Table 5. Distribution according to the reason for engaging in the inn and lodging house business
26 REASONS
FREQUENCY
PERCENTAGE (N=22)
Augment family income and source of livelihood
20
90.90
Apply skills
10
45.45
Use time wisely
4
18.18
Face up competition
4
18.18
15
68.18
Meet demand of tourist *Multiple response
Original Set-up of the Inn and Lodging Houses Table 6 shows the number of original rooms when the various inn and lodging houses started. Majority (45.45%) started with 5-10 original rooms. Around (18.18%) started with 11-15 rooms. One lodging house which started in 1993 has the maximum number of 35 rooms. The lowest number of rooms at the start was 10.
Table 6. Distribution of inn and lodging houses respondents according to the number of original rooms NUMBER OF ORIGINAL ROOMS
FREQUENCY
PERCENTAGE (N=22)
5-10
10
45.45
11-15
4
18.18
16-20
5
22.72
21-50
3 22
13.63 100.00
TOTAL Start of the Restaurants
27 Table 7 shows that some of restaurants in Sagada started from being small canteens serving nearby schools, the municipal hall and the hospital. About three (3) of them, however, really started as restaurants where food is cooked upon order unlike in the canteens where food is pre-cooked and served where customers can make choices by pointing. Reasons for Engaging in the Restaurant Business The restaurant entrepreneurs in Sagada, Mountain Province had different reasons for engaging in this kind of business. Table 8 shows that 88.89 % are engaged in this business because they want to earn profit. About 55.56% are in the business because of their passion for food. About 44.44% got into the restaurant business to cater to the demands from tourist for food. Table 7. Distribution of respondents according to how did restaurant started FREQUENCY 6
PERCENTAGE (N=9) 66.67
As a restaurant
3
33.33
TOTAL
9
100.00
PARTICULARS From a canteen
28 Table 8. Distribution according to the reason for engaging in the restaurant business REASONS To gain profit
FREQUENCY 8
PERCENTAGE (N=9) 88.89
To provide employment
2
22.22
2
22.22
As outlet for food
5
55.56
To cater to the demand of tourist
4
44.44
To continue the family
business
*Multiple response
Original Capacity of the Restaurant Table 9 shows the original capacity of the restaurant according to seats. Forty four percent of the Restaurants originally can accommodate 11-15 persons. About four of the Restaurants can accommodate as much as 35 persons.
Table 9. Distribution according to the number of original capacity of the restaurants NUMBER OF PERSON
FREQUENCY
PERCENTAGE (N=9)
5-10
2
22.22
11-15
4
44.44
16-20
1
11.11
21-25
1
11.11
26-50
1
11.11
29 Number of Enterprise Introducing Innovations and Types of Innovations As defined by Gow, an innovation is “an idea, a technique, or a device that was new to the adopting body, no matter whether is was something completely new to the world or something borrowed in whole or in part” (Brillantes, 2003). From the total number of the respondents, 87.09% introduced innovations in their operations. As shown in Table 10. Table 11 shows the various innovations introduced by the management of the inns and lodging houses. A notable number (54.54%) enhanced their facilities with the introduction of modern appliances like television, common refrigerators, and common washing machines, to name some. Other facilities introduced were parking area (22.72%), reception area (31.81%), bonfire area (36.36%) and tent area 18.18%). Modern services like internets (22.72%), massage (9.09%) and entertainment (13.63%) were also introduced.
Table 10. Distribution as to whether innovations were introduced
PARTICULARS
INN AND LODGING HOUSE
INN AND LODGING HOUSE WITH RESTAURANT
RESTAURANTS
TOTAL
F
P (n=16)
F
P (n=16)
F
P (n=16)
F
P (n=16)
Yes
14
87.50
6
100
7
77.78
27
87.09
No
2 16
12.50 100.00
0 6
0 100.00
2 9
22.22 100.00
4 31
12.90 100.00
TOTAL
Table 11. Distribution of respondents according to type of innovations introduced by the inn and lodging houses establishments
30
PARTICULARS Parking availability
FREQUENCY 5
PERCENTAGE (N=22) 22.72
Furnishing and lightning
8
36.36
Entertainment/Sound system
3
13.63
Security personnel
4
18.18
Reception area
7
31.81
Facilities
12
54.54
Burning area
8
36.36
Addition of a restaurant
4
18.18
Hot and cold shower
11
50.00
Tent
4
18.18
Internet connection
5
22.72
Paintings/sculpture
5
22.72
Massage therapy *Multiple response
2
9.09
Type of Innovations Introduced by the Restaurants Table 12 presents the innovations introduced by the restaurant owners. Majority of the respondents introduced an innovation that addresses the need for the customers for food, service environment etc. Specifically, service innovations came in the form of materials such as crockery/glass wares (86.67%), menu book (86.67%) and linen/table cloth (53.33%). New facilities for cooking and washing were added such as pantry/ cold storage (100%), back sink (80%) and dirty kitchen (60%). About 60 % even introduced local wines into their menu.
31 Table 12. Distribution according to type of innovations introduced by the restaurant establishments
PARTICULARS Crockery/glass wares
RESTAURANTS F P (n=16) 8 88.89
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16) 5 83.33
TOTAL F P (n=16) 13 86.67
Back sink
6
66.67
6
100.00
12
80.00
Pantry/cold storage
9
100.00
6
100.00
15
100.00
Menu book
9
100.00
4
66.67
13
86.67
Linen/table cloth
6
66.67
2
33.33
8
53.33
Separate bar
5
55.56
2
33.33
7
46.67
Good ambience
9
100.00
4
66.67
13
86.67
Paintings/sculpture
8
88.89
5
83.33
13
86.67
Local wine
5
55.56
4
66.67
9
60.00
Dirty kitchen
5
55.56
5
83.33
9
60.00
*
Multiple response
Reasons for Innovations Table 13 shows the reason for innovations of the entrepreneurs. The major reason for innovation by all the businesses were as follows: majority (92.59%) said it is to satisfy the needs of guest and customers,
and to cater to the demand of tourist
(92.59%)for relaxation and to entertain (77.78%). There is not much difference in the major reasons of the various businesses for introducing innovations.
32 Table 13.
Distribution according to the reason for innovations by the type of establishments
REASONS FOR INNOVATION
INN AND LODGING HOUSE F P (n=16)
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16)
RESTAURANTS F P (n=16)
F
TOTAL P (n=16)
To satisfy the needs of guest
12
85.71
6
100.00
7
100.00
25
92.59
Relaxation and entertainment
10
71.43
5
83.33
6
85.71
21
77.78
For attraction and beautify
8
57.14
4
16.67
4
57.14
16
59.26
To cater to the demand of tourist
12
85.71
6
100.00
7
100.00
25
92.59
To serve quality and affordable price
8
57.14
5
83.33
5
71.43
18
66.67
*
Multiple response
Effects of Innovations Table 14 shows the perceived effects of the innovations by the respondents. Among the 27 respondents who introduced innovations the most perceived effect is that the business gained more income (92.59%). Others viewed it as attracting more guest (77.78%) and consequently having, more room reservations (66.67%). Both of which accrue to higher income. Improved management (37.26%) due to the innovation introduced was also observed.
33 Table 14. Distribution according to perceived effects of the innovations by the type of establishments
EFFECTS OF INNOVATION
INN AND LODGING HOUSE F P (n=16)
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16)
RESTAURANTS F P (n=16)
F
TOTAL P (n=16)
More guest
9
64.29
5
83.33
7
100.00
21
77.78
More income
12
85.71
6
100.00
7
100.00
25
92.59
Satisfaction of guest
8
57.14
5
83.33
5
71.43
18
66.67
More reservations
9
64.29
5
83.33
4
57.14
18
66.67
Improvement of management
5
35.71
3
50.00
2
28.57
10
37.04
Local Ordinances There were no local ordinances that were passed and implemented that encouraged entrepreneur to innovate. This was noted by (81.4%) of the businesses. However, guidelines developed on do’s and don’ts for tourist were acknowledged by 18.52 of the entrepreneurs as having encouraged innovations.
34 Table 15. Distribution of respondents according to the local ordinances passed and being implemented in Sagada that encouraged the respondents to innovate
LOCAL ORDINANCES
None Do’s and don’ts of tourist TOTAL
INN AND LODGING HOUSE F P (n=16)
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16)
RESTAURANTS F P (n=16)
F
TOTAL P (n=16)
13
92.86
4
66.66
5
71.43
22
81.48
1
7.14
2
33.33
2
28.57
5
18.52
14
100.00
6
100.00
7
100.00
7
100.00
Key Factors Associated with Innovations of Respondents As presented in table 16, 85.19% of the respondents acknowledged that the Sagada authorities introduced some tourist programs. These programs include: curfew hour, dos and don’ts of the tourist, liquor ban, and the waste management. However, the entrepreneurs (66.66%) did not consider this to affect their decisions to innovate. The entrepreneurs were also largely agreeable that peace and order is a key factor associated with innovations. Lastly, most of the entrepreneurs (70.97%) considered the tourist themselves to have influenced their decision to innovate.
35 Table 16. Distribution of respondents according to the key factors associated with the innovations of the entrepreneurs
KEY FACTORS
Peace and Order Yes
INN AND LODGING HOUSE F P (n=16)
PURELY RESTAURANTS F P (n=16)
F
TOTAL P (n=16)
71.43
4
66.66
5
71.43
19
70.37
28.57
2
33.33
2
28.57
8
29.63
14 100.00
6
100.00
7
100.00
27
100.00
Yes
12
85.71
5
83.33
6
85.71
23
85.19
No
2
14.29
1
16.67
1
14.29
4
14.81
14 100.00
6
100.00
7
100.00
27
100.00
No TOTAL
10
INN AND LODGING HOUSE WITH RESTAURANT F P (n=16)
4
Tourism programs sponsored by local government
TOTAL Tourism programs affect decision Yes
5
35.71
1
16.67
3
42.86
9
33.33
No
9
64.29
5
83.33
4
57.14
18
66.66
14 100.00
6
100.00
7
100.00
27
100.00
Yes
12
75.00
5
83.33
5
55.56
22
70.97
No
4
25.00
1
16.67
4
44.44
9
29.03
16 100.00
6
100.00
100.00
31
100.00
TOTAL Tourist influenced in business
TOTAL
9
36 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS Summary This study was conducted to determine 1) how tourism-related business establishments in Sagada evolved; 2) identify the innovations introduced by the establishments; 3) describe some key factors that were associated with the innovations. The data were gathered through the use of interview schedules. There were 16 inn and lodging houses, 6 inn a d lodging houses with restaurants and 9 restaurants respondents interviewed in this study with the total of 31. The majority of the respondents belonged to the middle age bracket of 41-50. They are mostly married, and are females. Most have also gone to school. Majority of the inn and lodging houses, inns and lodging houses with restaurants and restaurants entrepreneurs are single proprietorships, Most (37.50%) of inn and lodging houses, (50%) inn and lodging houses with restaurants, and (44.44%) of the restaurants were established during 2001-2005. They have different reasons on how the business started. Most of the inn and lodging houses expanded their own homes to add rooms for rent to transients. On the other hand, most of the restaurants started from being small canteens serving nearby schools and the workers of the nearby municipal hall and hospital. The main reasons for engaging in the inn and lodging house business was to family income (90.90%). The main reasons for engaging in the restaurants business was to gain profit (88.89%).
37 Majority (45.45%) of Inn and lodging houses started originally with 5-20 rooms, while majority (44.44%) of the restaurants originally started with seating capacities of 11-15 persons. The major innovations introduced by the inns and lodging houses were largely improvement of facilities, like introduction of hot and cold shower, bonfire area, furnishing and lightning, and the reception area. In the case of the restaurants, the major innovations were: better ambiance , introducing materials such as pantry/ cold storage, menu book, and crockery/glass wares. The major reasons for innovations in the inn and lodging houses were as follows: majority (85.71%) to satisfy the needs of guest and customers, to cater to the demand of tourist (85.71%), and for relaxation and to entertain (71.43%) On the other hand, satisfaction (100%) also of the customers is the major reason for innovation by the restaurants, to meet the demand of tourist (100%) and to serve quality and affordable price (71.43%). The key factors associated with the innovations of the entrepreneurs are the peace and order, tourism programs, and the tourist themselves. Conclusions Based on the findings, the following conclusions are derived: 3. The growth of business establishments in Sagada is tourism related. 4. Tourism encouraged the introduction of innovations by the establishments 3. Innovations that were introduced centered on improving the facilities and services.
38 4. Peace and order is the key factor in encouraging the entrepreneurs to introduce innovations. Recommendations Based on the findings and conclusions the following recommendations are made: . 1. The growing tourism industry in Sagada should be encouraged by providing support for the entrepreneurs to continue introducing innovations. Tie-ups with agencies like the Department of Trade and Industry, and the Department of Tourism should be facilitated by the local government as well as by the entrepreneurs themselves. 2. The local government of Sagada should maintain the peace and order that is conducive to tourism and to the introduction of innovations. 3. The tourists should be guided accordingly to the local ordinances such as curfew hour, waste management, prohibited drugs and the do’s and don’t’s.
39 LITERATURE CITED BODEN, K. M. 2000. Management . 3rd ed. Rex Bookstore. Manila Philippines BRILLANTES, A. B. JR. 2003. Innovations and Excellence Understanding Local Governments in the Philippines. Pp. 64-65. CUMMING, E. S. 1998. Modern Production/Operation Management. John Wiley and Sons. Singapore. DAGUPEN, M. K., R. JANUSKWESKA., R. ARGUELLES., R. BAUTISTA., D. D. TAGARINO and J. VIANE. 2007. Innovation Potential in Small and Medium Enterprises in the Philippines DALE, E. 1978. Management: Theory and Practices. McGraw-Hill Company, Inc., New York. DAMASO, J. M. 1982. How to Start Your Own Business. Wm. C. Brown Publishers, College Division. United States of America. DRUCKER, P. 1985. Innovation and Entrepreneurship. Harper and Row. New York. p. 19. HISRICH. R. D., M. P. PETERS., D. A. SHEPHERD. 2008. Entrepreneurship. The Mcgraw Hill Companies. Inc. New York. REYNOLDS, J. E., LOWE, R., S. MARNOTT, 2004. Enterprise: Entrepreneurship and Innovation. REYNOLDS, G. D. and M. A. WHITE. 1997. The Management of Technology and Innovation: A strategic Approach ULIGN, J. and E. B. WEGGEMAN. 2001. Innovation, Entrepreneurship and Culture. UK:Edward Elgar Publishing. URBAN, G. L. and J. R. HAUSER. 1993. Design and Marketing of New Products. Ed. Prentice_Hall International Inc. New Jersey.
40 APPENDIX A Communication Letter Benguet State University COLLEGE OF AGRICULTURE La Trinidad, Benguet
December 2008 Sir/Madam: The undersigned is a fourth year Bachelor of Science in Agribusiness (BSAB) student majoring in Enterprise Management. I am presently conducting a research entitled “Business Innovations in relation to Tourism in Sagada, Mountain Province”, in partial fulfillment for the requirements of the course. In this regard, may I ask a portion of your precious time to answer all the questions to complete the research undertaking. Rest assured that all information you will give be treated with utmost confidentiality. Thank you very much for your support.
Respectfully yours, (Sgd.)ARRIANE E. CARREON Researcher Noted by: DARLYN D. TAGARINO Adviser
41 APPENDIX B Interview Schedule (Inns and Lodging Houses ) Instruction: Please fill in the blank or encircle/ check the needed information below. 1. Name of Respondent ____________________________________ ( ) Manager
( ) Owner
( ) Others ________________
2. Business Name __________________________ 3. Age: ____________ 4. Civil Status: ___ Single ___Married ___ Widower ___ Separated 5. Sex: ___ Male ___Female 6. Educational Attainment: _________________________ 7. Legal form of Business: (Please encircle) a. Sole-proprietorship b. Partnership c. Cooperative d. Corporation 8. When was the inn and lodging houses started? _________________________ 9. How many bedrooms were there originally? ___________________________ 10. How did you start the inn and lodging houses business? _________________________________________________ 11. Why did you get into the inn and lodging houses business? __________________________________________________________________ 12. What are the products and services? __________________________________________________________________ 13. Have you introduced any innovation in your inn and lodging houses business? ___ Yes
___ No
42 14. If yes, please describe your innovation according to the year introduced, source and reason. Description of Innovation Introduced
Year Introduced
Source of the Innovation Ex. Observation, training, external consultant, opinion of tourist, etc.,
Reason for the Innovation
Identity
15. What do you observe are the effects of the innovations you introduced? _____________________________________________________________________ 16. What are the local ordinances passed and being implemented in Sagada that encouraged you to innovate? _____________________________________________________________________ 17.
Did the peace ___ Yes ___ No
and
order
in
Sagada
encourage
you
to
innovate?
Explain ______________________________________________________________ _____________________________________________________________________ 18. Were there tourism programs sponsored by the local government of Sagada? ___ Yes ___ No Explain ______________________________________________________________ _____________________________________________________________________ 20. Did these tourism programs for the tourist that affected your decision? ___Yes ___No How: ________________________________________________________________ 21. Did the tourist influence you to engage in business? ______Yes _______No
43 How: ______________________________________________________________ APPENDIX C Interview Schedule (Restaurant) Instruction: Please fill in the blank or encircle/ check the needed information below. 1. Name of Respondent ____________________________________ ( ) Manager
( ) Owner
( ) Others _______________
2. Business Name __________________________ 3. Age: ____________ 4. Civil Status: ___ Single ___Married ___ Widower ___ Separated 5. Sex: ___ Male ___Female 6. Educational Attainment: _________________________ 7. Legal form of Business: (Please encircle) a. Sole-proprietorship b. Partnership c. Cooperative d. Corporation 8. When was the restaurant started? __________________________ 9. How many bedrooms were there originally? ___________________________ 10. How did you start the restaurant business? __________________________________________________________________ 11. Why did you get into the restaurant business? __________________________________________________________________ 12. What are the products and services? __________________________________________________________________
44 13.
Have
you introduced any innovation in your restaurant business? ___ Yes ___ No 14. If yes, please describe your innovation according to the year introduced, source and reason. Description of Innovation Introduced
Year Introduced
Source of the Innovation Ex. Observation, training, external consultant, opinion of tourist, etc.,
Reason for the Innovation
Identity
15. What do you observe are the effects of the innovations you introduced? ___________________________________________________________________ 16. What are the local ordinances passed and being implemented in Sagada that encouraged you to innovate? __________________________________________________________________ 17. Did the peace and order in Sagada encouraged you to innovate? ___ Yes ___ No Explain ____________________________________________________________ ___________________________________________________________________ 18. Were there tourism programs sponsored by the local government of Sagada? ___ Yes ___ No Explain ______________________________________________________________ ____________________________________________________________________ 19. Did these tourism programs for the tourist that affected your decision? ___Yes ___No How: _______________________________________________________________ 20. Did the tourist influence you to engaged in business? ______Yes _______No
45 How: ________________________________________________________________
