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May, 2014 Case Study Mombasa, Kenya Roger Williams Citizen of the UK Made large fortune in the primary sector Wanted to diversify his investments.

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Presentation on theme: "May, 2014 Case Study Mombasa, Kenya Roger Williams Citizen of the UK Made large fortune in the primary sector Wanted to diversify his investments."— Presentation transcript:

1

2 May, 2014 Case Study

3 Mombasa, Kenya Roger Williams Citizen of the UK Made large fortune in the primary sector Wanted to diversify his investments

4 Early years Sole trader Financial problems: especially cash flow and liquidity management. The Imperial became the most famous seaside hotel in Mombasa Positive corporate image and reputation. High quality service & elegant décor.

5 Change! World War II – British Empire turbulent times in Kenya independence movement 1.Roger’s heir – Jeff – sells in Until 1989 – five different owners. PROSCONS Attractive 200-room property with a private beach & easy access to Mombasa airport Recurring political unrest in neighboring countries; fear the situation in Kenya would deteriorate.

6 Global properties  International investment group  Private limited company  Shareholders: US, Japan & South Korea Hands off management style; preferred to have a manager on-site. Manager would generate profits that would be paid in dividends to GP. Yearly meetings: Calculate break-even quantity Set target profits Determine margin of safety

7 Jomo Kimathi The Imperial groundskeeper for the Williams family Jeff sold the hotel Helped Jomo obtain work permit in UK Jomo worked in the hotel industry in UK until he retired.

8 Martin Kimathi  Jomo’s son, born in London  grew up in a multicultural society  he was a victim of racist bullying Graduated from university with a degree in Hotel Management. When Jomo retired and returned to Kenya, Martin decided to go home as well.

9 The imperial The Imperial was recruiting & Martin was hired as one of five receptionists. Promoted to head of reception GP liked that he was African descent & westernized – perfect combo!

10 Expectations & career …Kenyan employees thought he was too westernized. Martin Well-paid professional; salary- performance related pay. Married Anima & had 2 daughters. Proud of managing the hotel where his dad was groundskeeper. Martin spoke some Kikuyu, but…

11 Long-term problems Once the premiere seaside hotel – The Imperial’s competitive position had slowly deteriorated. Competition Luxurious hotels Spas Themed restaurants WiFi access Modern, high tech feel Colonial charm i.e. old fashioned

12 Long-term Trend GP sole interest was profits. Martin was given limted budget each year for improvements. The Imperial’s market share was shrinking. Imperial Decline in bookings. Kenya # tourists increasing.

13 Market research Martin’s efforts: statistics from KNBS secondary market data marketing audit

14 Financial worries Martin found that: Working capital presented difficulties – seasonality of hotel operations Occasional problems following the monthly budget He had to design & implement strategies for dealing with liquidity problems.

15 Accountant recommends… Hotel, restaurant & special events Non-revenue producing departments (i.e. housekeeping) Martin had to prepare final accounts for GP: Profit & loss Balance sheet

16 Stock control Catering Department CHALLENGE: struggle to manage stock make appropriate calculations for closing stock

17 Craig chapman Humanitarian Motivations Opened an orphanage After independence stayed to work for other non-profit organizations. Early 20 th century

18 Susan chapman Craig’s grand-daughter left to study hotel management & returned to work at The Imperial. Susan applied for the manager position, however Martin was appointed. Head of Housekeeping

19 Human resources Martin needed to improve his working relationship with Susan. Three years after she was not selected she was still angry. She felt she had been discrimated against.

20 Leadership Styles Susan : efficient, hard-working and committed, was very task-oriented liked bureaucracy, formal accountability, and a clear chain of command. had a scientific approach to decision- making. staff found her cold, official and impersonal Martin & Susan- similarities: same age similar university educations neither fitted perfectly well in Kenyan society. Martin : much more laissez-faire style believed in empowerment and delegation. was always careful to let supervisors resolve problems (even if anxious about problems) warm, friendly and outgoing

21 Autocratic Focusing on her job – goal to make the hotel spotless & shining. she demanded more of the employees was intolerant of even minor mistakes Susan wants to prove GP made a mistake. Employees began to complain amongst themselves. Informal communication Gossip moved quickly through the hotel-stories and anecdotes of Susan acting overly autocratic.

22 appraisal Martin: Did not want to dismiss Susan; he considered her a valuable member of the staff. Martin suggested: Susan soften her leadership style. Susan’s response: She resisted any discussion about how she managed her staff.

23 Quality The Imperial is très magnifique Article by French travel journalist praised the high quality of its housekeeping: “We reach here the top of the highest international standards”, he wrote, “in terms of benchmarking, The Imperial is très magnifique”. *Martin appreciates professional importance of Susan; professionally, she needed leadership training.

24 November, 2013 GUTHONI: Housekeeping Department employee frequently calling in sick and did not come to work. SUSAN: Rather than enquiring about the reason, she dismissed Guthoni for repeated absenteeism. Unbeknownst to Susan, Guthoni had been diagnosed with a terminal illness and required frequent medical treatment.

25 Employees react! Collective action gave the employees a sense of solidarity that they previously never displayed. Martin noticed that many other frustrations were coming out into the open –the threat of strike action as empowering for the employees. Employees taking responsibility for the operations of the hotel to a far greater degree than before. Martin wanted to channel their frustrations toward constructive ends. The Imperial would emerge stronger from the conflict; necessary with big changes on the horizon. December: busiest month; Martin worries he won’t make his target profits if employees go on strike.

26 External Environment Martin believes with the long-term external issues facing The Imperial that strategic decisions were necessary.

27 Option 1 Make the case to GP that The Imperial needs to close for a whole year to allow for mass renovations in order to upgrade the hotel and reposition it to its former place as the premier hotel in Mombasa. Martin had recently travelled to Dubai and Muscat to see the most luxurious hotels in these regions. He understood that The Imperial had reached the decline phase of its product life cycle and needed rejuvenation. He believed that it was possible, although this would require substantial investment: in the physical condition of the hotel almost to rebuild it entirely in its marketing in order to relaunch it, maybe even with a new brand name. The new hotel would attract the same customer types, but the product would be much improved. It would also need an improved workforce to match its new vision. Martin sketched out two possible approaches for a Human Resources Strategic Plan

28 Option 1 Make the case to GP that The Imperial needs to close for a whole year to allow for mass renovations in order to upgrade the hotel and reposition it to its former place as the premier hotel in Mombasa. Martin had recently travelled to Dubai and Muscat to see the most luxurious hotels in these regions. He understood that The Imperial had reached the decline phase of its product life cycle and needed rejuvenation. He believed that it was possible, although this would require substantial investment: in the physical condition of the hotel almost to rebuild it entirely in its marketing in order to relaunch it, maybe even with a new brand name. The new hotel would attract the same customer types, but the product would be much improved. It would also need an improved workforce to match its new vision. Martin sketched out two possible approaches for a Human Resources Strategic Plan

29 Option 2 Change the nature of the hotel by transforming all the rooms into self-contained apartments with small kitchens. The target market for these apartments would be business travellers staying at least one week. The marketing audit had revealed that: there is an increasing demand for such apartments very few hotels in Mombasa offer such apartments the market is still small the market has high growth potential. The revenue from these apartments would almost match the revenue from the current hotel operations; it would be more stable, with fewer seasonal fluctuations; both fixed costs and variable costs for cleaning and maintenance would be much lower. The apartments would be serviced once a week, rather than daily. According to Martin’s workforce planning, this option could reduce the housekeeping staff by 70 %.

30 Option 2 Change the nature of the hotel by transforming all the rooms into self-contained apartments with small kitchens. The target market for these apartments would be business travellers staying at least one week. The marketing audit had revealed that: there is an increasing demand for such apartments very few hotels in Mombasa offer such apartments the market is still small the market has high growth potential. The revenue from these apartments would almost match the revenue from the current hotel operations; it would be more stable, with fewer seasonal fluctuations; both fixed costs and variable costs for cleaning and maintenance would be much lower. The apartments would be serviced once a week, rather than daily. According to Martin’s workforce planning, this option could reduce the housekeeping staff by 70 %.

31 Option 3 Form a strategic alliance with the famous safari tour company KenSafar. Together they would offer a two-week package tour. Customers would arrive in Mombasa, spend three nights at The Imperial, go on a seven-day safari tour, and then return to The Imperial for four more nights. This would allow tourists to go on a safari, first getting adjusted to the time zone and climate and later rest for four days before returning home. The owner and manager of KenSafar was Kamau Onyango, a spontaneous, dynamic and charismatic Kenyan who had many networks and contacts, and intuitively knew market trends, even without market research. Kamau insisted that if the strategic alliance were to go ahead The Imperial would have to: make some improvements to the appearance of the hotel pay Kensafar a 20 % commission for all hotel guests staying at The Imperial and booking through KenSafar undertake a marketing audit.

32 Option 3 Form a strategic alliance with the famous safari tour company KenSafar. Together they would offer a two-week package tour. Customers would arrive in Mombasa, spend three nights at The Imperial, go on a seven-day safari tour, and then return to The Imperial for four more nights. This would allow tourists to go on a safari, first getting adjusted to the time zone and climate and later rest for four days before returning home. The owner and manager of KenSafar was Kamau Onyango, a spontaneous, dynamic and charismatic Kenyan who had many networks and contacts, and intuitively knew market trends, even without market research. Kamau insisted that if the strategic alliance were to go ahead The Imperial would have to: make some improvements to the appearance of the hotel pay Kensafar a 20 % commission for all hotel guests staying at The Imperial and booking through KenSafar undertake a marketing audit.


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