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Introduction
According to Olsen, West and Ching-Yick Tse (2008) strategic management enables organizations succeed beyond sustained business performance to attaining competitive advantage. This implies ordinary business management practices do not guarantee business success. This implies that business managers have to look beyond the traditional methods of business management since the demands of modern business keeps changing.
As such, any methods adopted have to enable the modern businesses adopt to change. In this view a company has to build on its core competencies so as to gain competitive advantage. Core competence is perceived as the efficient management of resources, including the human resource.
This is attained through the utilization of the most appropriate competitive methods. This implies that a company has to design products and services which would enable it to exploit new business opportunities. Designing these products and services is only attained efficiently allocate and manage available resources.
The assertions above are analyzed Vis a Vis Hotel Island View case. On the face value, Hotel Island View is a successful business. The challenge of dwindling winter sales seems minor and insignificant.
However, a careful evaluation reveals that there are deep rooted weaknesses within the company’s management processes that expose the company to gross under performance and future uncertainties. Suffice to state that the core of the company’s current challenges lies in human resource development strategies currently employed by the company.
The Company tends to rely on unqualified and untrained employees. This directly affects the company’s management processes.
The purpose of this essay is thus expose three major issues facing the company and to provide workable solutions. As such, inability to attain competitive advantage, human resource development and management, as well as intelligence and information seeking strategies have been identified as core issues affecting Hotel Island View.
These issues are explained in detailed in the first part of this report. Furthermore, specific solutions to these issues are offered.
Inability to attain Competitive advantage
One of the key issues facing Hotel Island View is the failure to understand the link between core competencies and the attainment of competitive advantage. In order to understand how the company fails to attain competitive advantage, it is vital to recapitulate on a few issues pertaining Hotel Island View.
According to Max Harvey, the hotel’s General Manager, the hotel has experienced a sharp decline in occupancy rates during winter. Low occupancy rates have an immediate impact on the hotel since the vibe created during peak season is lost. This situation is complicated by the fact that, during winter, the hotel seems unable to provide all the services offered during the summer.
This is due to a number of factors ranging from inadequately skilled staff, financial limitations, among others. Solving the low occupancy rate seems easy task. However, the fact that the hotel is not adequately equipped to offer all services during winter complicates the issue.
Additionally, the hotels top management seems unaware of the fact that the current staff does not posses the necessary expertise that will enable it generate solutions aimed at enabling the business address new and emerging challenges. As such, the company is not able to adapt quickly to changing business environment.
According to Jehad and Faleh (2009), many of businesses have not realized the need to connect future business opportunities with the current management practices. Analyzed Vis a Vis Jehad and Faleh’s (2009) assertion, Hotel Island View seems unable to link its current management practices and emerging opportunities.
This is evident from the fact that instead of concentrating on building its core competencies, Island View Hotel management is concentrating on strengthening and protecting core products. Additionally, the hotel management is oblivious of the competitive space provided by dwindling occupation during winter.
While Jehad and Faleh (2009) portray the need for a company to build on its core competencies to exploit new opportunities, Ljungquist (2008) asserts that building on core competencies enables businesses to diversify products and services, and that such diversification should address emerging business needs.
This enables companies to out do competition. Ljungquist (2008) assertions are evident in Hotel Island View’s case since the company is inclined to protect its primary products and services. By concentrating on its core products (summer water sports and boarding), the company misses the opportunity to diversify its products and services. As such it cannot address emerging consumer trends.
As mentioned by the private tour guide, winter guest want different products than what the company offer during summer. As such, winter guests look for alternative activities such as tennis, golf, biking among others. Unfortunately, the company’s management is unaware of the needs of the winter guests, since it is blinded by the positive feedback from summer guests.
As explained by Ljungquist (2008) the inability of Hotel Island View to diversify its products portfolio emanates from the fact that the company does not have the relevant resources, technologies, expertise, practices and systems which will enable the it gain competitive advantage over its rivals.
Human resource management
Olsen, West and Ching-Yick Tse (2008) suggest that one of the best ways of achieving competitive advantage is through efficient management and allocation of resources, including the human resource. This assertion brings to the fore another key issue in Hotel Island View’s case: recruitment, management and development of human resource.
The problem of human resource management at Hotel Island View has many dimensions. To begin with, the hotel is a small establishment and as such, it cannot manage to hire experienced and qualified staff to work on fulltime basis. This is further complicated by the fact that the hotel is located in a remote and unattractive location.
As such, it fails to attract experienced staff especially during winter. This means that the hotel faces an irregular supply of qualified workers, especially considering that it needs such experience most during winter. As such, having inexperienced staff to manage the hotel during low season expose the hotel to mismanagement.
Additionally, the hotel over relies on students looking for part time summer jobs. According to Wilton (2010), inexperienced staff is not well equipped to handle the day to day management challenges and tasks in a company. In view of Wilton’s (2010) assertion, the reliance on inexperienced students expose the hotel to lack of focus especially pertaining addressing daily management challenges.
While the existence of inexperienced staff within Hotel Island View’s human resource poses a major challenge, the human resource dilemma take a more complicated dimension when considering the hotels competitive methods. Within Hotel Island View, there is an array of activities designed to keep visitors busy during summer. However during winter, the hotel does not have the required human resource to man and offer support in all these activities.
While Clardy (2008) sees this as a poor human resource development strategy, the company’s general manager sees cross training as the ultimate solution. However, this view is simplistic given that the hotel does not have a regular supply of fully qualified staff.
Furthermore, as Clardy (2008) and Jehad and Faleh (2009) assert, with poorly trained and unqualified staff, a company lacks the necessary human resource to build its core competencies. It is in this view that Hotel Island View lacks the ability to fulfill its promise to offer all services available during summer at winter.
While the effects of relying on inexperienced employees are not evident outrightly, a closer analysis of the company tendency to ignore current news tells the depth within which the company is affected by recruiting inexperienced employees. The hotel accountant makes efforts to inform the general manager on latest news. He goes further and analyses such information with regards to how these events affect Hotel Island View.
However, the General Manager, as well as the rest of the employees, perceives such events as insignificant. This is due to the fact that a majority of the employees lack formal training. Clardy (2008) confirms that on the job training helps employees overcome day to day management deficiencies.
This leads to improved performance by the human resource, effectively affecting business outcomes positively. However, since most of the hotels permanent employees lack formal training, they therefore lack basic management competencies (Clardy, 2008). This negatively affects the business.
Intelligence and information gathering
As mentioned earlier, the private tour guide poses valuable information which would enable hotel island view address the challenge of low occupancy during winter. However, a few factors play against his determination to share such knowledge with the hotel management. To begin with, the hotel rejects his request to place his tour company brochures in the hotel.
While this has a direct impact on his tour business, there are negative long term effects which affect Hotel Island View than his tour company. By refusing to collaborate with the private tour guide, Hotel Island View management fails to utilize one of the key requirements of building on its core competencies: establishing successful partnership with existing business partners (Jehad and Faleh, 2009).
While Jehad and Faleh, (2009) consider this as a lack of awareness on enhancing a firms core competencies, Kleinberg, Suri and Tardos (2006) sees it as an opportunity lost in building strategic networks. Strategic networks are vital as they not only help firms seal gaps that exists within the business structure but also utilize, synthesize and apply information that emanates from others partners within the network.
In view of Kleinberg, Suri and Tardos’ (2006) assertion, Hotel Island View has failed to utilize the private tour operator as the bridge to accessing crucial business information. This can also be perceived as one of the ways through which the hotel management fails to identify emerging competitive space.
In relation to Jehad and Faleh’s (2009) study, the inability of a firm to discover new competitive space implies that the company has not developed its core competencies effectively. Furthermore, Jehad and Faleh (2009) argues that by utilizing strategic partners a firm is able to exploit the competitive space, especially those brought about by new business trends.
This is attained by focusing beyond performance based on products and prices to creating strategic alliances. However, the company ignores the opportunities provided by the tour company operator and chooses to rely on products and prices as its main performance enhancement method. This results to poor business performance.
While the inability to establish networks with other private companies seems tied to Hotel Island View’s association with Primo Hotel Alliance, the hotel’s inability to gather market intelligence and information has a more significant dimension. The company had a tendency to rely on inexperienced and untrained staff. While Wilton (2010) suggests that the human resource is the most valuable asset for any firm, this assertion is not applicable to Hotel Island View’s case.
This is because the hotel’s human resource does not provide the necessary resources, especially information resource. This is evident from the fact that other than the company’s accountant who makes efforts to follow current news, other employees fails to see the correlation between current events and the effects on hotel business.
The issue is aggravated by the fact that the company’s General Manager, a leader who is naturally supposed to motivate his juniors by setting standards and goals (Jehad and Faleh, 2009) fails to see the need to keep the hotel human resource updated on current events.
The fact that he is unable to correlate these two variables indicates his lack of managerial skills and competencies and exposes a weakness in the company’s management structure. As such, the inability of the company to utilize information as a business asset can be attributed to two major factors: its inability to establish strategic networks and partnerships as well as unskilled manpower.
Recommended Solutions
Co-alignment strategy
Gaining competitive advantage is one of the major determinants of a firm’s performance in the business world. To do this, the firm must be able to link competitive advantage with the company’s core competencies. This will be achieved by aligning factors within the prevailing external environment and the strategic choices that a firm makes (Branzei and Thornhill, 2006).
In effect, Hotel Island View will not only attain improved business performance but also ensure the attainment of competitive advantage over its rivals in the hotel industry. By external environment, economists refer to the forces that determine change within the business environment.
These include factors that influence consumer trends and preferences. More often than not, the effects of these forces, if not properly managed, impact firm’s performance negatively (Olsen, West and Ching-Yick Tse, 2008). With regards to Hotel Island View’s case, there are a number of external factors which influence the need for change on how the hotel’s management approaches business.
These include the weather season pattern and its influence on business trends. During summer, the hotels occupancy rates are almost 100%. However, for the last two years, the occupancy rate during winter has dropped significantly to 36%. Furthermore, during winter, guest demand for alternative recreational activities other than water sports.
This shows that the consumer trends changes with changes in weather seasons. As such, the hotel needs to realize that changes in weather patterns affect business trends.
To address the effects of external factors, the hotel management needs to make the right strategic choices. This includes the use of best competitive methods which will enable the company to gain competitive advantage over its rivals.
While Olsen, West and Ching-Yick Tse (2008) suggest that the need to reevaluate its products and services portfolio, Jehad and Faleh (2009) suggest differentiation; offering a wide range of products and services at market competitive prices. In view of Jehad and Faleh’s (2009) assertion, the suggestions made by the private tour operator on the need to have additional recreational activities such as snooker, tennis, biking, among others seems relevant.
By doing this, the management should be able to design new products and services, which will not only help Hotel Island View address the consumer trends but also gain market advantage over its rivals. The designing of new products and services will be attained through efficient allocation of human, financial, tacit and any other relevant resource. This will enable the hotel build its core competencies, and effectively improve its performance.
Human resource management and development strategy
Hotel island view human resource challenge is multifaceted. To begin, most of the employees at the hotel lack relevant training. Furthermore, the hotel supply of qualified human resource is irregular. In trying to come up with a solution for this problem, the hotels General Manager suggests cross training of existing personnel.
This will enable the employees acquire multiple skills, and thus serve in more that one area when needed. This seems to be in line with Jehad and Faleh (2009) assertion on the need to develop a firm’s capabilities to redistribute employees to handle new business challenges.
However, Clardy (2008) asserts that this is a traditional method and needs to be supplemented with modern forms of efficient human resource utilization. As such, Clardy (2008) suggest that firms needs to conduct a capability analysis. This is attained through evaluating a firm’s work routines and how those routines fit into the firms operations.
This enables the firm managers to understand the basic workflow and thus reengineer the firms operations. The existing human resource personnel is thus trained and equipped with the relevant skills and knowledge to handle the reengineered workflow.
Strategic networking
As explained by Kleinberg, Suri and Tardos (2006), the inability of Hotel Island View to gather and utilize Valuable information exposes structural gaps in the company’s business structure. To fill in these gaps, (Olsen, West and Ching-Yick Tse, 2008) suggests reorganization of a firm’s strategic management practices.
While Olsen, West and Ching-Yick Tse, (2008) sees strategic management as a combination of the external environment, finances, human resource management and business performance, Hotel island Views case requires the reorganization of the hotels human resource portfolio, especially with regard to the top management.
This is as a result of the realization that effective strategic management involves the cognitive abilities, the experiences and information management proficiency of the top management (Olsen, West and Ching-Yick Tse, 2008). Jehad and Faleh (2009) asserts that a firm’s top management needs to set goals which inspire company’s staff.
As such, there is need to reorganize the company’s top management. Jehad and Faleh (2009) assertion is in line with Clardy’s (2008) assertion that a firm’s human resource development strategies are basic requirements towards building company’s core competencies. This will be attained by replacing the company’s General Manager, preferable by the company’s chief accountant.
This is because the accountant seems aware of the implications of current news, something that the general manager seems unaware. If this is done, it will ensure that the company’s top management has the appropriate information management skills.
The company’s accountant has the appropriate information management skills and competencies since he is able to accurately assess current events and the effects they have on the hospitality industry. As such, he is best placed to help the hotel to establish information and intelligence seeking networks.
There are some valuable sources of information unused by the current hotel management. These include partners within the industry who, by offering auxiliary services generate valuable market intelligence. As explained by Kleinberg, Suri and Tardos (2006) the new manager should consider creating networks links with partners whose aim is to gain from establishing such strategic networks.
In this case, the private tour operator, who currently, holds crucial information that would benefit hotel island view, seems a relevant business partner. While Clardy (2008) links a company’s human resource development to the achievement of a company’s core competencies, Wincent, Anokhin, Örtqvist and Autio (2009) assert that a company’s human resource is the most vital asset that enables a company develop strategic networks.
This leads to improved business performance. In this case, hotel island view needs to evaluate its human resource development strategies, especially on hiring the top management personnel to help meets its business information needs.
Conclusion
There are several issues that face Hotel Island View. Among them includes, the inability to attain competitive advantage, inappropriate human development strategies as well as weak information management strategies. While these issues seem unrelated, their core root is the company’s human development strategies.
The company has a tendency to rely on unskilled and untrained employees. This denies the company the opportunity to utilize new business opportunities since most of the employees lack the relevance expertise to spot such opportunities. The lack of skills is manifested in the inability of the employees to spot and utilize valuable information, as well as perform other strategic management practices.
Since most of the employees lack basic management skills they are not able to link the company’s human resource development strategy with the challenges the company is facing.
Reference List
Branzei, O. and Thornhill, S. (2006). From ordinary resources to extraordinary performance: environmental moderators of competitive advantage. Strategic Organization, 4(1), pp.11-41.
Clardy, A. (2008). The strategic role of Human Resource Development in managing core competencies. Human Resource Development International. Web.
Kleinberg, J., Suri, S. and Tardos, E. (2006). Strategic network formation with structural holes. Social and Behavioral Sciences. Web.
Ljungquist, U. (2008). Specification of core competence and associated components: a proposed model and a case illustration. European Business Review, 20(1).
Olsen, M., West, J., and Ching-Yick Tse, E. (2008). Strategic management in the hospitality industry. Upper Saddle River, New Jersey: Pearson Prentice Hall.
Wilton, N. (2010). An introduction to human resource management. London: Sage
Wincent, J, Anokhin, S., Örtqvist, D. and Autio, E. (2009). Quality Meets Structure: Generalized Reciprocity and Firm-Level Advantage in Strategic Networks. Journal of Management Studies 47 (4).
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