Executive Summary of the Jumeirah Group - Essay Example

page Saud Ahmed Module Executive Summary The Jumeirah Group started catering in the hospitality industry in 1997. It has expanded beyond the boundary of the Middle East, reaching to America, Europe, and Asia. By the year 2012, the Group plans to complete a total of 60 hotels and resorts that are currently underway in different states of the world. The year of 2007 brought the emergence of global financial crisis, bringing more stressful financial period in the global economy. The Jumeirah Group also faced some economic and financial problems, which directly influenced on the corporate strategy of global expansion and growth. Despite the pressure of the global financial crisis, the Group continued with its existing policy. Consequently, the Group’s Executive Chairman announced that some delay over the opening of certain hotels and resorts is unavoidable. Corporate Strategy: Jumeirah Group Introduction Worldwide destinations spend over $1,480 billion dollars to attract tourism, enabling it as a lucrative product (Pike, 2005). Additionally, vision must enable trade and investment in that quest (Hankinson, 2005). And, to enjoy a successful branding strategy for tourist destinations, five factors, such as retail, services, transit hub, tourism and economics, must be there to implement strategic vision (Jamrozy, 2007, Wong et al. 2006). And the vision of the Jumeirah Group heads in the same direction. In the year of 1997, Jumeirah Hotels & Resorts, as a company initiated to serve in the field of hospitality. Due to its commitment and constant success in the field, Jumeirah Group became a member of Dubai Holding in 2004 (About Jumeirah Group, web).Being based in the city of Dubai, the Jumeirah Group owns and runs Jumeirah Beach Hotel, Jumeirah Emirates Towers, the Jumeirah Carlton Tower, Jumeirah Bab Al Shams Desert Resort and Spa in Dubai, Madinat Jumeirah, Jumeirah Lowndes Hotel in London, and the Jumeirah Essex House on Central Park South in the city of New York (Enz, 2010). Additionally, the Group also owns the Wild Wadi, which is considered as one of the premium water parks outside of North America; further, the Emirates Academy of Hospitality Management, which is only third-level institution in the region catering the services in the learning and teaching in the field of hospitality management, also come under the management of this group (Enz, 2010). This group is a giant in the field of hospitality management working beyond the boundaries of the Middle East. Its strategic objectives till the year of 2012 is to conclude the ongoing projects to 60 hotels and resorts, including some projects are underway in Americas, Asia Pacific, North Africa and Europe (Jumeirah, web). Currently, the Group is determined to expand not only within the Middle East but also other parts of the world. Although, the group has published its corporate responsibility report in 2008, clearly highlighting its corporate responsibility, mentioning its corporate strategy elements, vision, mission, corporate social responsibility and certain other elements are accounted for. Despite showing so much exceptional growth and expansion in the recent years, the Jumeirah Group has not published the corporate responsibility reports after the year of 2008, since then there are no additional financial and operational information suggesting the current level of its commitment on the green house gases, customers, and other stakeholders. The Group seems unable to produce its corporate responsibility reports, raising more doubts on its commitment towards corporate issues, including corporate social responsibility. In the subsequent parts of this paper, the concept of corporate strategy is followed by the Jumeirah Group’s corporate strategy of global expansion and growth analysis. Subsequent to that, critical analysis is carried over the Jumeirah Group’s disclosure policy; in the end, a conclusion and some recommendations are also made part of this paper. Corporate strategy Corporate strategy brings strategic issues before the strategic management. These strategic issues are defined, understood, analysed and discussed before they are channelized via the tool of corporate strategy in the operational activities. However, such channelization highly depends on a clear and precise understanding of the concept of corporate strategy as it varies from one organisation to another organization. Consequently, it has various definitions, but the most relevant definition is provided by Collis and Montgomery (2005); corporate strategy is the way a company invents values through configuration and coordination of its multi-market activities. Basically, this definition is based on three parts: the fundamental focus is given on the process of value creation; then, the coordination of different aspects of corporate strategy such as product, geographic, and targeted consumers. The final step elaborates the role of internal structure in implementing and managing the policies ensuring attainment of corporate objectives (Furrer, 2010). The geographic expansion beyond the traditional boundary also finds its presence in a corporate strategy. Locating new business and service sites and using them to expand business, are such part of the corporate strategy that answers many questions. By opening up new business units, a company depicts its full understanding of its existing and current market position. Additionally, by going beyond traditional boundaries clearly highlights significant focus of the existing administration over its current corporate strategy. Corporate strategy of Jumeirah Group After the year of 1997, the Jumeirah Group pursued a very hectic rather aggressive corporate strategy in the hospitality industry. Not only pioneering in the hotels and resorts management, the Group embarked up on the other sectors of hospitality industry; such as Jumeirah restaurants, the Emirates Academy of hospitality Management, Talise or spa and Wild Wadi Water Park collectively hallmark the portfolio of the Jumeirah Group. After becoming a member of Dubai Holing in 2004, the Group decided to increase its business beyond the geographic boundaries of the United Arab Emirates to other parts of the world. In its corporate strategy, the Jumeirah Group decided to open up different mega hotels and resorts in different continents. In its corporate strategy, it decided to expand globally by adding more luxury hotels and resorts worldwide by 60 by the year of 2012 (Jumeirah development, web). In the Americas, the Asia Pacific, the Middle East & North Africa and Europe, 2, 6, 11, and 3 luxury hotels and resorts were respectively included in the corporate strategy. These are billion dollars projects that were envisioned by the management of the Jumeirah Group. Aggregately, the Group launched the construction work of these 22 projects in different parts of the world. The year of 2007 saw the emergence the global financial crisis. The global financial crisis started from the United States of America and slowly it spread globally, resulting in a massive unemployment, investment and liquidity crisis globally, rising cost of living not only in America but also other parts of the world. Such situation did not allow easy and cheap short term and long term borrowings. As a result, many construction projects were forced to either stop working or bear the burden of additional cost of production and investment. Despite such a huge financial crisis unprecedented in the recent economic history, the Jumeirah Group was unable to adjust or modify its existing corporate strategy of expansion and growth. Rather, it continued the same corporate strategy before and after the financial crisis. As a result, the emergence of global financial crisis heavily influenced the corporate strategy pursued by the Jumeirah Group. Interestingly, the close scrutiny of the published corporate report of the Group does not show any sign that the group is feeling the heat of the crisis. However, in the corporate report of 2008, the Executive Chairman of Jumeirah Group has clearly acknowledged that some delay is unavoidable over the opening of new projects. Such corporate strategy is exposed to many limitations and weaknesses. First, managing the work of 22 projects is not an easy task. It becomes more difficult and challenging when the projects are underway in different parts of the world in a given period of time. Second, many projects are still underway instead they should have been operational by now. Critical analysis The Jumeirah Group has only issued its 2008 Corporate Responsibility report. The Group has not issued any other such reports in the subsequent years. Even, in the 2008’s Corporate Responsibility report, the Group has claimed to annually publish such reports. After three years, the Jumeirah Group has failed to issue any such report. This raises many questions about the Group’s integrity and true intention towards its Corporate Social responsibility, its commitment to reduce the GHG emissions. Without having such disclosure, no one would be able to agree with the claims made by the Group in its 2008 report. Additionally, the claims and policy towards corporate strategy and corporate governance issues cannot be relied as there are no subsequent reports after 2008 to authenticate the claims and get informed the current level of progress on such commitments. Conclusion and Recommendations The Jumeirah Group initiated its business operations in 1997 in the hospitality industry. Due to its constant success, it has opened hotels and resorts in America, Britain, and other parts of the world. In the year of 2004, the Jumeirah Group become a member of Dubai Holding. This membership greatly strengthened the Jumeirah Group and it launched an aggressive corporate strategy. Currently, the Jumeirah Group has 22 projects underway in different continents of the globe. In the Americas, it has 2, in the Asia Pacific, in the Middle East and North Africa and in Europe, 6, 11, 3 projects respectively are underway. However, the emergence of global financial crisis negatively hit the corporate strategy of the Group. As a result, the Group faced the different problems including the liquidity crisis. Such crisis required the Group either to stop working on the current projects or to bear an additional cost of construction. Consequently, Executive Chairman of the Jumeirah Group accepted that the Group faces some delay over the opening of certain projects Even after the severe global financial crisis of 2007, the Group has survived and has constantly expanding. In its strategic planning, the Group plans to complete its current under construction hotels and resorts to 60 by 2012. However, it has certain issues that need to be given an immediate attention. Recommendations 1. Instead of constructing 22 mega projects, the Jumeirah Group should focus say 10 projects. By focusing on 10 projects at a time, the Group would be better equipped to concentrate and give sufficient time, and efforts to their immediate completion. This immediate completion would not allow further delay. 2. There is no time frame mentioned when these 22 projects will be completed. It is recommended that the Group must have a clear date of completion of such projects. Not aggregately, rather each project should be separately planned within the time of completion. With this approach, the Group would be in a position to properly and clearly understand the current level of completion of a particular project. 3. As there are 11 projects which are underway in the Middle East and North African region, it looks appropriate to focus on such projects. The main reason is that they are nearer geographically. 4. Additionally, there is no disclosed fund arrangement policy or the sources of funds that are being used for the purpose of developing such projects. It is recommended that the Group must have a back plan besides having a fund arrangement policy. By having this policy, the Group would be in a position to avoid the impacts of any new global financial crisis or internal liquidity crisis. The presence of back plan would be a great source of help in any type of unfortunate eventuality. 5. The Jumeirah Group must ensure to annually publish its corporate responsibility reporting. In this way, the current and potential clients would be in a better position to understand the existing corporate practices of the Group. 6. The UAE nationals must be encouraged to join and serve in the Group’s hotels and resorts. This would minimise the current over-reliance on the expatriates. References 1. About Jumeirah Group, [Available at: http://www.jumeirah.com/en/Jumeirah-Group/About-Jumeirah-Group/ ] [Accessed on: 5 May, 2011]. 2. Enz, C., 2010, ‘Hospitality strategic management: concepts and cases,’ 2nd ed., Hoboken N.J.: John Wiley & Sons. 3. Pike, S. (2005), "Tourism destination branding complexity", Journal of Product & Brand Management, Vol. 14 No.4, pp.258-9. 4. Hankinson, G. (2005), "Destination brand images: a business tourism perspective", Journal of Services Marketing, Vol. 19 No.1, pp.24-32. 5. Jamrozy, U. (2007), "Marketing of tourism: a paradigm shift toward sustainability", International Journal of Culture, Tourism and Hospitality Research, Vol. 1 No.2, pp.117-30. 6. Wong, C.Y.L., Miller, C.C.M.J., Choi, C.J. (2006), "Singapore in transition: from technology to culture hub", Journal of Knowledge Management, Vol. 10 No.5, pp.79-91. 7. Collis, D., 2004. Corporate strategy 2nd ed., Chicago  Ill. ?;Maidenhead: Irwin?;;McGraw-Hill Education. 8. Furrer, O., 2010. Corporate level strategy?: theory and applications, Abingdon  Oxon?;;New York  NY: Routledge. Total words excluding references are 1,970. Read More