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Shangri-La Hotel's

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International Business

on 11 February 2014

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Transcript of Shangri-La Hotel's

Shangri-La Hotels
Five Generic Competitive Strategies


Introduction
Our key outcomes of this presentation are to:

Identify the key elements of Shangri-la's strategy and apply a generic competitive strategy which relates to the company's activities.
Identify the key features of the culture employed to determine the company's success.
Understand the impact of culture on the mission statement and the Shangri-La care program.
Explore the challenges associated with Shangri-La's expansion with the comparison of three countries and conclude whether the current policies/procedures address these challenges.
Key Elements
of Shangri-La
Strategy
5
Core Principles

Vision
Training
Program
(heavy
investment)
Global Growth
Employee and Customer Satisfaction
5 Tier Organisational Design
Initial Focus of Domestic Market
Other aspects:
Incentives (compensation) to improve standards
Staff to customer ratios
Keeping costs low
Strategy for Competing Internationally
Key Elements of Culture
Importance of Culture in Success
Impact of Mission Statement and Care Program on Company's Culture
Compare Expansion Challenges in Europe, Australia and North American with China
Conclusion
Low Cost Provider
Broad Differentiation
Focused Low Cost
Focused Differentiation
Advantage
Broad
Narrow
Best Cost
Holiday Inn
Travelodge
Local Hotels
Local Hotels
Crowne Plaza
Shangri-La
Marriot
Hyatt
Traders
Key Features of Culture
5 Tier
Empowering People
Relationship
Orientation
Personalized Guest Service
Competitive Advantage
Acculturation
Values and Attitudes

Offering customers an
unforgettable experience by
blending local cultures,
exotic art, and lively ambience
Hall (1975) High and Low-context Typology of Cultures
Brief Industry Background
Drivers
Market Availability
Industry Standards
Competition
Demand
Risks
Barriers -
Culture
Political and Legal

Targeted similar labour markets
Training to ensure same level of service (standardisation)
KSI - wages and culture (adaption)
Expansion into China - opportunities for hotel development, rapid economic growth lugus 1
Management contracts and owner/operator developments
Shangri-La's Approach
Perlmutter (1969)
EPRG
Ansoff Matrix
High - as highlighted in their vision and mission
High context dependent upon developing social trust and relationships, negotiations are slow a ritualistic.
China
Low context gets straight to business, values skills and performance, negotiations are legalised (contractual) and as quick and efficient as possible.
England and America
Mission:
"Delighting customers each and every time"
Big impact - company and employees must understand the significance of cultures to provide appropriate and quality service.

Organisational Culture
Shared
Values
Beliefs
Meaning
Behaviour
Designed to develop a consistent style of service, deliver superior guest experience and build brand loyalty.
Shangri-La motivate employees through compensation and career paths.
Employees are delegated decision making roles for effective business operations as unhappy staff = bad service (knock on effect.)
Hotels are REQUIRED to allocate and use a training budget as part of the continual culture progress.
RESULT - Shangri-La Care Training Programs
Transactional Approach -> Relationship Approach
The hotel industry is very mature; marked by intense competition.
Industry wide growth amongst international countries rather than domestic arena.
Highly segmented ranging from very small, economy and privately owned to residential, deluxe and international groups.
The global hotel industry is expected to be valued at $480 billion by 2015. Key players are focusing on developing regions with growth potential.

Shangri-La is a deluxe hotel group comprising of over 81 hotels and 34,000 rooms.
Individualism VS Collectivism
Power Distance High VS Low
Uncertainty Avoidance High VS Low
Masculinity VS Femininity

Hofstede's Cultural Dimensions
Ethnocentric
Polycentric
Regionocentric
Geocentric
Risk Assessment
Key- A1 (safest) - D (high risk) source: coface.com
Stepping Stones
Challenges
Culture - casual
Language
Employment - wages, part time staff
Employee decision making authority
Staff being poached
Industry growth slowing in Europe and booming in China
Entry barriers -
Where to expand?
Cost (land/build or buy existing
premises)?
Time?

Culture
Focused differentiation strategy
Identified KSI and responded e.g. staff being poached - offer incentives and career progression taking a market development approach to expand globally standardising quality service but adapting to each culture. It has used Lugus principles looking out (focused on China during boom, when competition and global opportunities arise gone global, looked inside to improve functions with training, culture and organisational structure and LP3
Culture is really important and it is clear that when there is a large gap success is more challenging
Expansion challenges differ from region the key issues in this circumstance are wages and culture, but economic issues are also present - it is more probable that new hotels are possible in developing economies where there is space, buildings can be bought out, cost less and growing market demand (saturated in UK)
There is clearly a difference in the two markets, culture in this service industry has a major impact and success is based, there is a market but on the positive side risks are low. The core values and training set out to address expansion challenges and are a good foundation
Living Culture
"The view and room size gets them in...the service brings them back"
Multi-lens perspective
Full transcript