Shangri La Case Study
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Case Study of Shangri-La Case Study
Executive SummaryThe Shangri-La hotels is a group of five-star hotels with a chain of hotels and resorts across Asia, Oceania, North America and Europe.
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The group of companies was first founded in 1971 with the first Shangri-La hotel started in Singapore. The group of hotels is renowned for its hospitality, serene environments, wonderful staff, as well as successful management. The company has established over 92 hotels and resorts since it was founded and continues to expand with more hotels currently being constructed across Asia. In this paper, the management section of the group hotels will be put into perspective. Various challenges facing the hotel such as the shortage of staff and other issues are also discussed throughout the paper. This paper gives answers to several questions about the issues facing Shangri-La Hotels in Asia and other parts of the world. The first question asks about the problems that this company faces in their efforts to expand beyond Asia. The paper states the problems and goes ahead to give a detailed analysis of those problems. The second question is about the problems facing Shangri-La Hotels in their efforts to expand within Asia. The several challenges that hinder the development of this company within Asia are discussed in details. The other question is asking the steps that Simon Bridle should take to make sure that the employees will start showing initiative when it comes to the situation that requires prompt decision making. One of the techniques that he can use is empowering workers. This will raise their confidence and therefore they will be more than willing to tackle situations head on. Several methods can be used to empower workers. They include Job Enrichment, Continuous Improvement, Self-Managed Work Teams, and lastly Informal and Participative Decision-Making Programs. All these methods are covered in this paper. The last question was asking the measures that Simon Bridle should take to prevent other rival companies poaching workers from the company. Three different possible actions that he should take are analyzed in details. Their merits, as well as demerits, will be discussed. After all the three have been covered, the best option will be picked based on its merits and suitability.
Table of Contents
TOC o “1-3” h z u FACULTY OF BUSINESS, ECONOMICS AND LAW PAGEREF _Toc428021504 h 1INDIVIDUAL COURSEWORK COVERSHEET PAGEREF _Toc428021505 h 1Coursework Details PAGEREF _Toc428021506 h 1Student Details PAGEREF _Toc428021507 h 1Student Declaration PAGEREF _Toc428021508 h 1Executive Summary PAGEREF _Toc428021509 h 31.Challenges facing Shangri-La Hotels in their efforts of expanding beyond Asia PAGEREF _Toc428021510 h 5Human Resources Shortage PAGEREF _Toc428021511 h 5Delegation of Authority PAGEREF _Toc428021512 h 62.Challenges that faced Shangri-La Hotels in their efforts of expanding within Asia PAGEREF _Toc428021513 h 7Shangri-La Hotels Academy PAGEREF _Toc428021514 h 7Competition PAGEREF _Toc428021515 h 7Local Hotels PAGEREF _Toc428021516 h 7Wage Issues PAGEREF _Toc428021517 h 83.Empowering employees PAGEREF _Toc428021518 h 8Informal and Participative Decision-Making Programs PAGEREF _Toc428021519 h 9Job Enrichment PAGEREF _Toc428021520 h 10Combining Tasks PAGEREF _Toc428021521 h 10Establishing Client Relationship PAGEREF _Toc428021522 h 10Direct Supervision Reduction PAGEREF _Toc428021523 h 11Continuous Improvement PAGEREF _Toc428021524 h 11Self-Managed Work Teams PAGEREF _Toc428021525 h 114.Wage Issues PAGEREF _Toc428021526 h 11Maintaining current wages PAGEREF _Toc428021527 h 11Increasing wages while reducing staff level PAGEREF _Toc428021528 h 12Competition PAGEREF _Toc428021529 h 125.References PAGEREF _Toc428021530 h 14
Challenges facing Shangri-La Hotels in their efforts of expanding beyond AsiaThe following challenges faced Shangri-La Hotels in their efforts of expanding beyond Asia.
Human Resources ShortageThe expansion of this hotel into Europe, North America, and Australia resulted in visible and volatile challenges. Human resource is the biggest challenge that faced Shangri-La Hotels. These regions had more expensive labor markets. In addition to this, trained hotel staff was hard to find. This pushed the cost of acquiring staff very high (Kippenberger and Kippenburger, 2014).
In general, the ratio of staff to the guest is 1.5. This means that there is 1.5 staff allocated for each guest. In Australia, this ratio is very low. In Sydney for instance, the ratio of staff to guest was 0.8 meaning that it has a deficiency of 0.7 to reach the overall ratio. In Singapore and Hong Kong, the ratio is 1.25 and 1.5 respectively. In China and Malaysia, the ratio is as high as 2.5.the higher the ratio of staff to the guest, the better the services provided by the staff. This is because the staff is not overworked meaning that they are always fresh and active (Kippenberger and Kippenburger, 2014).
In Asia, it is very easy to acquire labor. Anybody can be picked in the street to offer those services. In addition to this, there are many people searching for jobs so getting labor is easy. However, in Europe, North America, and Australia, getting workers is hectic and very expensive. Government of these countries have placed strict measures to control the wages that employees should receive. This is not the case with Asia as the company is the one that determine what the workers get. In addition to this, working hours pose another great problem to the company. Workers can only work for a shorter duration as compared to Asia (Ltd, Essex, and Karim, 2012).
The ratio of staff to the guest is high in Europe because of the high cost of hiring staff. Many countries have put in place high wage limits to employees, especially in the hotel market. This forced this company to hire less staff to balance books. The main aim of a company is to make a profit. Therefore, this company had to hire less staff in Europe to make sure that they are not forced out of business. This issue slowed down the growth of these hotels as they were required to invest heavily (Ltd, Essex, and Karim, 2012).
Delegation of AuthorityThe branches established away from the headquarters faced many problems that involved the delegation of authority. The power to make decisions by the management in those branches was very low. The employees were good in following instructions but when an issue came up, they were reluctant to take an initiative of countering the situation. The employees were not used to handling such cases, and that is why they did not take the initiative (Cooney, 2011).
In other areas, local managers were reluctant and unwilling to give up and delegate their perceived authority. This made situations very bad when the manager was not around because there was no one to lead others in the right direction (Cooney, 2011).
This problem resulted in huge losses that hindered the growth of the company. This is because the services offered when managers were not around were of poor quality causing customer dissatisfaction. In addition to this, there were problems in the accounting section that led to the loss of cash (Askegren, 2005).
Delegation of authority comes with some challenges. One of the disadvantages of this option is that it causes risks to the business. Managers are trained professionals who know how to run the business well. When the authority is given to other staff, there are things that are beyond their knowledge that they will find very difficult to handle. As a result, they will make poor decisions that will cause problems to the company.
According to the law, there are some duties that cannot be delegated. If the manager goes ahead and delegates them, there is a risk of a lawsuit. For instance, those duties that require personal judgment and skills cannot be delegated. When the duties are given to unskilled personnel, losses could arise making the client ask for compensation.
Delegating duties is adding a burden to your employees. This may make them ask for a raise in their salary, and when this does not happen, there will be a crisis in the workplace. Therefore, a manager must be very careful when delegating duties.
To solve this great problem, the management took several measures. The frontline managers and employees were trained on the procedure and importance of delegating authority. The training aimed at instilling confidence to make decisions to the employees, without punishment or kickbacks. As a result, the chaotic situations that were the order of the day reduced. The standards of services went up, and the frontline employees and managers got the courage to make important decisions. Losses reduced drastically and things started going in the right direction (Kippenberger and Kippenburger, 2014).
Challenges that faced Shangri-La Hotels in their efforts of expanding within AsiaThe following challenges faced Shangri-La Hotels in their efforts of expanding within Asia.
Shangri-La Hotels AcademyAcross Asia, there was a shortage of qualified staff needed to fill growing needs. The labor that was available had no training in hotel services. Therefore, there was a need for establishing a facility where people would be trained in order to offer high-quality services. Therefore, the top management of this company decided to establish an academy where the management would take people from the streets and then trained to be professionals. This was less expensive as compared to looking for the trained workforce (Ltd, 2010).
Establishment of the academy was a challenge to the company. To start with, huge sums of money were needed for the construction and equipping the facility. The other thing entailed hiring experienced tutors to make sure that those who graduated from this academy had the required skills and knowledge. The company was forced to stop other activities in order to get funds to be used in the establishment of this academy. Measured were put in place to make sure that workers took the shortest time possible in this facility (Ltd, 2010).
CompetitionThe promising economic growth, profitability and hotel development in China attracted many other big companies like Regent, Hyatt, Ritz-Calton, and Sheraton. All these hotels are dominant market players. To make the matter worse, France’s giant hotel company France’s Accor have 30 hotels that are under construction (Ltd, 2010).
All these hotels provided stiff competition to Shangri-La Hotels. As a result, the profit level went down. This meant that there were no enough funds to expand. Growth was slowed down as the available funds were less because they shared customers with other hotels. In some cases, they were forced to lower prices of their services to attract more customers (Ltd, 2010).
Local HotelsThe local hotels posed a challenge to Shangri-La Hotel. The influx of foreign brands and capital created forces in which local hotels utilized thus improving their services and establishments. This created competition indirectly. Some local hotels formed alliances with international brands thus proving to be a big brand in the market (Murillo and Llerda, 2008).
Wage IssuesThose new companies who joined China market caused many problems to Shangri-La Hotel. Some of them poached their trained staff by providing better terms. Others offered higher wages than the standard industry wages causing a lot of movements. The biggest victim was Shangri-La Hotel. They had used large sums of money to train these workers from scratch. They suffered huge losses as they were forced to train other workers (Murillo and Llerda, 2008).
Reservation managers were offered a 35 percent wage increase to leave Shangri-La Hotel and join a competing company. Security managers were given a 50 percent wage increase. Many staff left this company and joined others. There were voids left because the movement was massive. This meant that the ratio of staff to guest decreased because training others took some time. As a result, the quality of services went down, as those who remained were overworked (Murillo and Llerda, 2008).
All these challenges posed a great hurdle in the development and growth of the company. To overcome this problem, the company established strategic planning, practices, and policies. With time, they were able to get back on their feet. They revised their terms of employment and made it attractive. The quality of their services were improved, and they were able to make a high profit (Murillo and Llerda, 2008).
To tackle competition, Shangri-La Hotel should raise the quality of their services. This can be done through changing their training methods to suit the new market requirements. All employees should be taught to use technology to increase efficiency. In order to support the advanced training, the company should look for additional sources of funds. One of the sources can be selling of bonds or mobilizing stakeholder to contribute.
On the wage issue, the company should come up with a competitive wage structure. This will enable it retained the most skilled and experienced staff. As a result, the quality of services will be maintained and customers will keep on coming.
On the local competition, Shangri-La Hotel can collaborate with some of the best local companies to provide services to local customers. This will ensure that it maintains a good reputation in the local market.
Empowering employeesWhat Simon bridle need to do to ensure that employees participate in decision-making authority is to empower them. The primary goal of empowering employees is to give them a greater voice in all decisions about matters related to work. Their decision-making authority may range from providing suggestions to exercising opposing power over management decisions. Different organizations have different areas where employees are allowed to make their opinion known. However, some of the areas that the management should allow workers to participate include working condition, the way a job is to be performed, company policies, peer review, working hours, and supervisors’ evaluations (Seuer and Sueur, 2011).
Many experts believe that firms can improve productivity by just empowering employees. This is achieved in two ways. First, empowerment strengthens motivation through giving workers the chance to attain rewards from their good work. This makes them feel important. In addition to this, they are filled with a sense of accomplishment. The other way in which productivity improves due to empowerment is through better decisions. The employees on the front line have a better knowledge of different tasks, and so if they are involved in decision-making, the results will be very good (Seuer and Sueur, 2011).
Empowering employees to have initiatives in identifying problems as well as involving the top management in coordinating solutions in an organization can increase organization learning and enhance the process of decision-making. For instance, Toyota Motor Company has a program of employee empowerment where some of them have been given the task of identifying and helping rectify problems that occur during product assembly (Seuer and Sueur, 2011).
A vehicle coming out of the assembly line having a paint defect is considered a good opportunity to find out what caused this defect. Employees give suggestion on the cause of the defect, and this bring a good feeling thus increasing productivity. Several primary managerial levels can be used to enhance employee empowerment. They include:
Informal and Participative Decision-Making ProgramsThis involves managers and support staff making joint decisions daily. Workers do not feel good when blanket authority make every work related decision. In this program, the manager is the one to decide the extent of employee involvement in decision-making. The amount of authority depends on factors such as decision complexity as well as the degree of employee acceptance. Empowerment should occur in cases where they can make better decisions than their managers. One disadvantage of empowerment is sometimes the workers interest is different from that of the organization. The management should make sure the employees are focused before empowering them (Seuer and Sueur, 2011).
Job EnrichmentOne cause of lack of motivation is the design of the job. The aim of job enrichment is to redesign jobs so that they are more intrinsically rewarding. Managers should have the following characteristics to be in a position to enrich job:
They should have a variety of skills. They should know methods of carrying out the different tasks. In addition to this, they should have task identity. This entail how employees think their job contribute to the overall product production. They should have the ability to determine the significance of the task. Managers should also understand autonomy and feedback (Seuer and Sueur, 2011).
A manager with the above skills will motivate workers. The management should conduct research and identify jobs that require enrichment. After this, they should redesign it to make it better suited to workers. This will motivate them and thus increase productivity.
The following are some of the specific job enrichment techniques:
Combining TasksThis involves assigning to single individual tasks that were performed by different workers. For instance, in a factory that manufactures furniture, each worker can make an entire chair or table rather than just contributing to the making of a particular part. The work of assembling, sanding, and staining an entire chair can be done by one person. When this is implemented, it will increase skill variety and task identity. This is because every worker would be required to work on a component from start to finish.
Establishing Client RelationshipThis can be done by placing the worker in the front line where they will interact with customers. For instance, an auto dealership company may allow its mechanic to talk directly to customers about the service problems they want to be fixed, rather than the usual procedure where customers must pass through the service manager first. When this relationship is established, skill variety is increased as workers have an opportunity to develop interpersonal skills. They can carry out the larger part of the job and witness how their work impacts customers. In addition to this, their decision-making authority increases.
Direct Supervision ReductionWhen workers are allowed to carry out tasks once done by supervisors, they gain autonomy. For instance, clerks can be permitted to crosscheck their work or order supplies directly.
Continuous ImprovementIn order to achieve continuous improvement, the management should build quality into all product phases. This is usually referred to as total quality management. These programs empower workers and encourage them to trace product problems and then redesign production processes with the aim of eliminating them. This is through using various statistical and problem-solving techniques. In situations like this, empowerment occurs because there is a need to involve worker at all levels to ensure improvement. Continuous improvement programs are gaining popularity. This is because they are successful (Seuer and Sueur, 2011).
Self-Managed Work TeamsThese are work teams that have been given the power to manage themselves. Managers do not control their work. Instead, they use group norm in regulating activities. The group plan, coordinate, organize, and take corrective actions. Some groups have the power to hire, fire and take disciplinary action against a member of the group. They are given responsibilities that are usually held by managers. This minimizes the burden of work that faces many managers. For a self-managed work team to function properly, they should have qualities such as technical skills, administrative skills, and interpersonal skills (Seuer and Sueur, 2011).
All these efforts and techniques are carried out for the better of the company. Empowering employees ensure that they participate in all decision made thereby increasing their productivity. This will eliminate the losses and increase the income. As a result, the company will expand and become a major force in the Asian market.
Employees empowerment comes with its problems. One of the shortcomings of this technique is the misuse of power. The employee may be given so much authority that they start misusing it. They may have access to some of the confidential information that they may leak to competitors for a fee. They may carry out other fraudulent activities that may cause losses to the company. When competitors get this information, they may use it to sabotage the company and force it out of the market. Therefore, the management should be very careful when empowering employees.
The manager’s authority will be diminished when employees are empowered. There is a higher possibility that workers will not respect instructions given by their seniors. As a result, there will be chaos and confusion about whose orders should be followed.
There will be delays in carrying out tasks. Employees may take long to understand the new system. A delay in taking decisions and planning may hit the company hard. This may end up causing huge losses.
The change of guard may have a serious effect on the quality of work. The new system will be a bit confusion thereby lowering the quality of services offered. The knowledge and experience that the manager has may be lacking in the self-managed work teams. This means that the possibility of making poor decisions is very high.
Wage IssuesMaintaining current wagesMaintaining current wages as well as staffing levels is a tricky option to take. As it can be recalled, reservation managers were offered a 35 percent wage increase to leave Shangri-La Hotel and join a competing company. Security managers were given a 50 percent wage increase. Many staff left this company and joined others. There were voids left because the movement was massive. This meant that the ratio of staff to guest decreased because training others took some time. As a result, the quality of services went down, as those who remained were overworked (Bratton and Gold, 2000).
There is a need of taking quick measures to prevent the situation from going out of hand. Sticking to the current wages and staffing level can be very costly to the company. Therefore, Simon Bridle should seek professional advice from an expert in order to know the best way to handle this case. In addition to this, he should try to change the way employees matters are handled in order to create loyalty. As a result, many will choose to remain with the company, and the problem will be solved. He can also start providing incentives and rewarding those who work hard (Grieves, 2003).
Increasing wages while reducing staff levelThe Increase in the wages while reducing the staffing level will not help the situation. This is because there will be voids that will be left because by those who will be laid off. This means that the ratio of staff to the guest will decrease. As a result, the quality of services will go down, as those who remain will be overworked (Harzing and Ruysseveldt, 1995).
Employees’ motivation will be low due to tiredness. This will affect the company in that many customers will go to their competitors who will be offering better services. The company will start making losses and eventually will not be able to run smoothly.
Instead of doing this, the company should introduce a unit that talks about loyalty to the employer. This means that those who will be graduating from the academy will not be swayed easily. In addition to this, the management should create a favorable working environment for all employees. This includes revising the working hours and paying handsomely for extra hours worked. The company should provide all protective equipment and gears to workers that are based on dangerous workstations. All these efforts will create a feeling to employees that the company cares for them thus they will stick with it (Mondy, Noe and Gowan, 2005).
CompetitionThis alternative looks like the better option. In our world today, competition is the order of the day. The phrase ‘survival for the fittest’ is well understood. Employees are always looking for greener pastures. Therefore, if a company fails to offer competitive wages, workers will go to their competitors. This will leave them with few and inexperienced worker meaning that their services will be of low quality. Customers will not be satisfied with these services and will opt for other competing companies. As a result, the company will suffer huge losses (Mathis and Jackson, 2003).
This option has shortcomings. Increasing wages means that the company’s profit level will reduce drastically. This will affect its growth and development. The shareholders will also be affected because their income will be low. Partners and suppliers will also be affected. The management should focus on raising the quality of their services to attract more customers and increase profit levels (Noe, 2006).
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