International Expansion & Jumeirah International in India - Research Paper Example

Part 1 2 Introduction 2 Description of the Organization 2 1.2 Type of Business 3 1.3 Products 3 1.4 Customers 3 1.5 Country Based and Subsidiary 4 Mc Kinsey 7 S Framework 4 Key Drivers for Expansion 5 2.1 General Drivers 5 PESTLE Analysis 6 Economic Factors 6 Social Factors 7 Technological Factors 7 Legal Factors 7 Environmental Factors 7 2.2 Advantages Specific to the Location Chosen 7 Implication on the HR strategy 8 3.1 Culture 8 3.2 Legal 8 Competitive Analysis 9 Section 2- Human Resource Planning 9 Structure of Setup 9 Recruitment 11 Selection 13 Performance Management, Employee Relations/Engagement 14 Training and Development 15 Reward/Punishment Systems 16 Summary 17 References 19 Part 1 Introduction Twenty first century has been characterised as the age of globalisation in the business parlance. In this century business organizations are expanding beyond geographical and political frontiers so as to capture the market share across different geographies. The aspect of globalisation has also resulted in enhanced levels of competitions among firms. This has heightened the need for better planning and efficiency so as to attain sustainable competitive advantage. Firms are increasingly resorting to international expansion in an attempt to capture a larger market share. Moreover with the advent of developing nations like India and China firms are making a beeline to enter these lucrative market segments. The present study also focuses on the aspect of international expansion; the firm selected for the study is Jumeirah International with regards to its international expansion in India. Description of the Organization Jumeirah Hotels and resorts are based in Dubai, UAE and are considered to be one of the finest in the industry. It was founded in the year 1997 and was included in the prestigious Dubai holding in the year 2004. Since its inception the firm has become a synonym for quality and innovativeness with the firm having won numerous accolades in the field of hospitality management. The group has been known for creating benchmarks and standards for the industry (Jumeirah-a, 2010). The organization is engaged in the hospitality sector and is accredited with a large number of innovations. Some of the benchmarks in the hospitality industry such as Burj Al Arab touted as the most luxurious hotel of the world. The firm has an international presence in London, US and Maldives (Jumeirah, 2010). Innovations and excellent quality form the USP of the organization. The resorts’ and hotels operated by the organization are rated as amongst the finest in the world. 1.2 Type of Business Jumeirah hotels operate in the lucrative hospitality sector the product and service portfolio of the firm consists of luxury hotels, restaurants, amusement parks and residences. A major part of the firm’s properties are based out of Dubai and the United Arab Emirates. The main business of the firm lies in operating hotels. Apart from this the firm also has business interests in other related areas like amusement parks etc. 1.3 Products The product category of the firm consists of a large number of hotels and other areas of hospitality management. The product portfolio of the organizations is composed of luxury hotels and resorts, venue hotels, residential services, spas, restaurants and water parks. The firm also realises the importance of the presence of an effective workforce to ensure greater efficiency of the staff. As a part of this strategy the organization has started a learning academy for hospitality management which would provide quality training and development to numerous individuals so as to ensure greater efficacy in operations. This assumes significance since the success of a firm operating in the hospitality sector is largely dependent on the efficacy of its quality standards (Jumeirah-a, 2010). 1.4 Customers Jumeirah targets a highly specific and niche target market which is comprised of the ultra premium customer segment. Most of its hotels and resorts are highly expensive and cater to a highly niche target market audience. This can be realised from the fact that the organization has the world’s most luxurious hotel in its product offering. The target market segment of the organization is characterised by presence of large volumes of disposable income. The customers belonging to this segment have highly specific needs and wants and do not mind paying a premium for quality service. Any deviations in the desired levels of quality standards would hamper the positioning of the organization in the minds of the target customers. Hence every possible step must be maintained so as to ensure adherence to the quality standards. 1.5 Country Based and Subsidiary Jumeriah is primarily based in Dubai in the UAE, which is also its head office. The firm owns wholly owned subsidiaries in USA, UK and Maldives where other hotels of the company are based. The firm also has a learning academy in Dubai that would help the organization to impart effective training to individuals. Mc Kinsey 7 S Framework The Mc Kinsey 7 S framework is a tool that analyses certain aspects of an organization. These seven aspects can be divided into two type’s namely hard S and soft S factors. The hard S factors comprise of structure, strategy and systems whereas the soft S comprises of factors like shared values, skills style and staff (Burtonshaw-Gunn, 2009, p.2). Structure: The Company has a horizontal organizational structure with the governing body comprising of executive and non executive directors who form the most powerful decision making body of the organization (Jumeirah-b, 2010). Strategy: Jumeirah has a strategy of targeting niche customer base hence it strives towards creating excellent service quality standards in its service offering. The organization also strives towards creating continuous innovation in its product and services. Systems: The organization has an effective system of running operations backed by high end technology like ERP to provide better services to the customers by streamlining the different processes and departments of the organization. Shared Values: Jumeirah has extremely strong values in the organization; the company believes in integrity, team work, growth, people focus, recognition and innovation and incorporates these elements in the value framework of the organization (Jumeirah-c, 2010). Skills Style: The Company believes in teamwork and have a style of open communication combined with mutual support so as to attain competitive advantage. It also has an effective policy for inducing continuous innovations in operations and service quality. Staff: Jumeirah has an extremely talented and well trained staff to provide excellent service standards to its customers. The company considers its staff as key associates or stakeholders and pays considerable attention towards rewarding and motivating the employees of the organization. Strategies have been accordingly framed so as to ensure that the individual’s needs and wants of the employees are recognised and their contributions are acknowledged so as to motivate the individuals (Jumeirah-c, 2010). Key Drivers for Expansion 2.1 General Drivers International expansion provides large scope to organizations to expand their business to different consumer markets. Some of the general drivers that prompt organizations for international expansion are stated below: Enhanced levels of competition Political and Economic Integration Growth of Economy Market diversification (Lascu, 2003, p.9-11). PESTLE Analysis Political Factors India is the largest democracy of the world and is considered to have one of the most stable governments across nations. The Government follows a proactive strategy to encourage investments since the economic liberalisation of the nation in 1990. The government of the nation is headed by the president of the nation who is the supreme commander of the armed forces. The president is advised by the prime minister and his council of ministers who is elected to the parliament on the basis of popular mandate held once every five years. The nation is divided into 28 states and seven Union territories (CIA, 2010). The stable and democratic form of governance makes it one of the most sought after places for overseas investment. Economic Factors India is the second fastest growing economy of the world with an annual GDP growth rate of 7.4 percent on an annual basis as of 2009. The country has made numerous strides since the liberalisation of the economy in 1990. The GDP in terms of purchasing power parity stands at an impressive figure of $ 3.68 trillion making it the fifth largest in the globe. The nation also has the presence of a large talented workforce which makes it one of the favourite destinations for overseas investment (CIA, 2010). The nation’s growth in sectors like IT, telecom makes it one of the most attractive destinations for the global hospitality industry. The country is visited by numerous people including business travellers and tourists alike who make it an excellent location for Jumeirah to expand internationally. Social Factors India is among the world’s most culturally advanced nations, which is evident from the fact that it has numerous cultures residing together in the same country. This makes it one of the most ideal tourist destinations as travellers from far across the world visit the nation to get a taste of the culture of the nation. The nation is the birthplace of Ayurveda for which numerous individuals visits the nation. These factors make it highly attractive for Jumeirah to expand internationally. Technological Factors India is one of the highly technologically advanced nations of the world. It has top rated academic institutions which churn out the best talent every year. The nation has a very strong IT industry which draw numerous guests from across the world every year. This again emerges as a strong point for Jumeirah to expand internationally to India. Legal Factors India has a well defined legal framework; the Supreme Court of India serves as the apex court which is the highest court of law. In addition to the Supreme Court there are other high courts and lower courts in every province of the nation. The legal framework of the nation is based on the tenets of the English law. India has accepted the compulsory jurisdiction of the International Court of Justice with certain reservations (CIA, 2010). Environmental Factors India is one of the nations that produces large emissions of greenhouse gases and is committed towards reducing the carbon footprints. 2.2 Advantages Specific to the Location Chosen India is the second fastest growing economy of the world and represents a huge market for business organizations across the world. The nation has seen a surge in the economy after the liberalisation process in the 1990’s. In case of the hospitality sector the demand for quality hotels has been on the rise with average revenues increasing by approximately 29 percent. A research report states that the demand for quality hotels is expected to increase due to the rapid growth rate of the nation. The open skies policy and the advent of low cost air travel have also promulgated the need for quality accommodation. The growth of tier 2 cities has also created greater demand for quality hotels in the nation. Jumeirah with its expertise in the hospitality sector could very well step in to fill the void created due to a mismatch in the demand and supply levels in the hospitality industry of the country. India also has a large number of academic institutions that churn out large number of talents every year which could well work out to Jumeirah’s advantage (Joshi, n.d., p.41-43). Implication on the HR strategy 3.1 Culture India has a large pool of talented workforce; the work culture of the nation is well acclaimed across the world as India is known for producing large pool of highly talented employees. Presence of academic institutions of high repute also adds to the advantages of Indian employees. 3.2 Legal The industrial law governs and acts as a guiding principle for the legal framework of the labour laws in India. This law is derived from the basic laws of UK. The trade dispute act of 1979 serves as the legal framework for defining the relationship between the employer and the employee. This law defines the maximum work hours as well as the minimum wages for employees (Bhasin, n.d., p.1). 3.3 HRM strategy and style The liberalisation of the India economy coupled with the attractive business market of India has attracted numerous multinational firms to the nation to establish their business in the area. This has also induced the multinational work culture in the nation which is reflected in the HR policies of the organizations operating in the region. The entry of multinationals has led to the growth of MNC work culture like flat organization structure, reward policy etc (Rao, 1994, p.1). Competitive Analysis The analysis of the market environment in India reveals considerable difference in the working culture in India and UAE. Labour laws are generally stricter in India than in UAE. In addition to this labour unions are largely present in India and are often known for militant trade unionism. Hence firms must be cautious while dealing with trade unions. In addition differences also exist in the working cultures in the two nations. On one hand organizations based in UAE are known for inducing intrinsic motivation while their Indian counterparts are known for inducing extrinsic motivation trough direct rewards etc. Jumeirah must therefore analyse the best possible HR strategies if it wants to expand internationally in India. An effective HR strategy must be designed which would take care of the cultural, sociological and environmental aspects of the local host nation. This would not only help in creating an effective HR policy but would also help in creating sustainable competitive advantage for the organization. Section 2- Human Resource Planning Structure of Setup The most important challenge faced by an establishment is the development of the organisational structure. The framework of jobs and the different departments make up the structure of the organisation. The structure should be aligned with the goals and strategies of the organisation (Media Wiley, n.d., p.28). In the hotel industry, managers develop the hotel structure providing the job specifications and pattern of authority and control. In this company the structure or setup would be as presented in Figure: 1, there would be different degrees of work specialisation depending on the organisation structure. Above all would be the General Manager who would be assisted by the Assistant General Manager. The hotel is divided into seven departments with one person responsible for running each department. The people responsible for running the departments are the Director of housekeeping, the Front office manager, the Chief Engineer, the Director Security, The Director Human Resource, the Director Sales and the controller. The General Manager and his assistant may belong to the home country as they would not have to interact with the host citizens. The Chief engineer, Director Security and the Controller are also recommended to be citizens of UAE as they would have to directly report to the headquarters of the company based in UAE. However, the front office manager, Director Sales and the Director Human Resources should be people from the host nation because they would be directly have to interact with the local citizens. They would be familiar with the local cultures and behaviours. It is obvious that people from the country would know the requirements of the people and would be able to provide solutions easily. It is obvious that the start-up company would be confronted with the problem of employee turnovers. The management would have to focus on curtailing employee turnover rather than filling vacancies resulting from high turnovers. It would be critical for the management to ensure a fair and satisfactory working environment for the employees. Superiors would have to guide the new employees through the path of attaining organisation success. Giving rewards and recognition for the works performed by the employees would go a long way in gaining their loyalty towards the organisation. Factors which triggered employee turnovers would have to be captured by ensuring fair salaries according to the industry standards, formulating a proper system of performance appraisal, formulating a personalised reward system, designing a prospective growth process for employees in the organisation, providing a motivational environmental. In addition to these, employees could be given the liberty to choose their work schedules, select their training requirements and interest, asking for inputs for improving their quality of services. Also they could be allowed to participate in the succession plans. This would help to motivate them and thus control the problem of turnover to a large extent. Figure 1: Structure of the Organisation (Source: Author’s Creation) Recruitment The process of recruitment would begin by informing the citizens about the positions required and vacant. The selection methods chosen cater to the position of the front office executive in the organisation. The position would be involved in such tasks as ensuring that customers were satisfied with their services and that it resulted into increased sales and revenue for the organisation. The recruitment policy should be such which promotes equal opportunity while selecting the most appropriate individuals for the said position. The company must ensure that the candidates screened for interview must have the required educational qualifications and expertise. Candidates are to be screened according to their formal education, experience and their potential for further development (Williams, 2009). The following strategy would be undertaken to reach the desired labour market. The organisation must contact with the office of human resources on notifying the opening. Human Resources are responsible for reviewing and approving the job description, determining the plan, establishing the hiring range and ensuring approval of the budget before the announcement of the position. The positions may be posted on the website of the human resources for a few days before it gets filled. The company may also announce the position externally in case of attracting a more diverse pool of talent. The vacancies must be advertised outside colleges and in the campuses. The hiring department along with the human resources determines the right scope of search. They develop and place the advertisements to reach candidates. The positions may also be advertised on various other websites and job portals. Newspapers would be a good medium of attracting talents. Advertisements may be placed on the regional, national or other professional publications. The advertisement must include a summary of the responsibilities required for the position, the minimum education and expertise (Williams, 2009). In this case five front office executives would be required for the company. The advertisement would carry the required educational and job experience of the candidates. The position would require candidates having minimum of two years of experience in the hotel industry, with good communication skills and a bachelor’s degree in hotel management. The candidates must have a good convincing power. The job role would include receiving guests, attending to enquiries and phone calls, travel arrangements for the senior management, performing the courier and despatch services, other administrative and reception duties. The recruitment process would include a written test to evaluate the aptitude of candidates followed with a round of personal interview. Selection After the date of closing, the original applications and the Information sheets would be sent to the recruitment panel that are responsible for short listing the candidates. (Docushare, 2009, p.9). The selection procedure begins with the screening of resumes for identifying the most qualified candidates for the positions as per the advertisement. Desirable criteria must be used for reducing the huge pool of applicants meeting the essential criteria. There should be no change in the selection criteria or introduction of new criteria during this stage. It must also be ensured that the applicants not successful are sent responses just after the process of short listing. Applications must be kept highly confidential and secure in case of any enquiries during or after the process (Docushare, 2009, p.9). Since the company is based in United Arab Emirates, the local candidates would necessarily suffer from a sense of insecurity. Thus the company must ensure that the applicants do not suffer from insecurity when submitting their documents to the company. The next step is to interview the candidates. The human resource department or the hiring department would interview the candidates shortlisted. Since the position is that of a front office executive, the questions would be framed as per the requirements of the position. The questions planned would be pertinent to the responsibilities and duties of the work. This would ensure an effective outcome for the interview. The interview process would be followed by the process of evaluation. Evaluation would be based on the meeting the business plans and its capability to influence “projections about future human resources and programs designed to meet future demands” (Jackson & Schuler, 1990, p.3). Based on the results candidates would be absorbed in the organisation. Candidates would come from different organisations having different cultures. Thus there would be the need for an induction training to help them adjust to the organisational environment and strategies. Performance Management, Employee Relations/Engagement Performance management forms a critical factor in the entire human resource planning. To achieve a sufficient level of performance “pursuing a customized, proactive and reactive performance management strategy becomes vitally important” (Wiese, 2009, p.1). Considering the position of a front office executive in the hotel, the performance would be measured against how efficiently the executive would be able to handle calls coming from different parts of the world. It would require excellent communication and inter personal skills. The performance would also be measured against the number of people coming to the hotel. The front office executive is also required to greet the incoming customers to the hotel. One way of measuring the performance of the executives would be to collect feedback from the people using the services of the hotel about their performance. The executives may be set targets. Then their performance would be evaluated against how far they would be able to achieve the targets. Regular monitoring of performance would be required to identify the areas which require training. There would be a single monitor to supervise all layers in the software track and extracting performance indicators. Each layer would have its own analysis and monitoring tools which would help in the analytical decision making (Wiese, 2009, p.2). Some of the motivating practices employed in the country are providing an attractive and competitive benefit package with components like flexible hours, life insurance and disability insurance. They are also allowed to share their knowledge through training sessions, team assignments, and presentations. Employees could also be asked about what perks and benefits would they appreciate and other what other requirements would make them work better. Some of the personal issues of the employees would also motivate them, like birthday celebrations and other days of importance to the employee. There could also be child care, gym and health care facilities. It is important that the human resource department achieves the motivation of employees to ensure their best performance. Motivation can be achieved by giving various kinds of employee benefits. These benefits would again be based on their performance. The benefits could be both monitory and non monitory. Increasing employee participation in the management of the company would help to attain greater initiative and motivation from them. Face to face interviews may be conducted with the employee representatives (Department of Trade and Industry, 2010, p.5). The employee representatives would be effective in presenting the complete picture of the status of the employees. They would be able to identify the requirements of the employees and propose plans to increase the performance of the same. It is also critical that the company works towards improving management and employees’ relation. One way of achieving this would be by encouraging greater participation of workers in the management. Employees must be allowed to voice their opinion on how to improve the performance of the organisation. This would help to ensure less dissatisfaction among the employees also make them feel a part of the organisation. Training and Development The training layout would necessarily consist of developing skills of the workforce. Hospitality organisations would require well trained employees (Cannon, 2002). Employees’ skills are the primary factors on which the satisfaction of guests is concerned. The training program would include professional development and personal development. The professional training would be directly related to improving efficiency of employees based on their performance. It would not be the same for all employees. The training would depend on the performance of employees. The personal training would include all employees and it would be aimed at developing the overall skills of the employees. In case of the front office executives, the training would aim at developing skills for attracting guests to the hotel, hospitality of the guests and maintaining relationships with them. The efficiency of employees would be reflected through their ability to maintain amicable relationships with the guests. This would ensure to develop and maintain loyalty of the guests towards the hotel. A loyal guest would repeatedly think of availing the services of the hotel when required. He would not take the risk of going to another hotel which is unknown to him if he is satisfied with the present one. The importance of relationships is greatly felt in the hotel industry and works towards attaining goodwill for the company. The organisation may arrange workshops, work conferences and educational programs. Apart from these, on the job training would be effective in grooming candidates to attain the required skills. The organisation may also make arrangements for training candidates while they are still pursuing their education. This would give them hands on experience of the work in different positions requiring different types of responsibilities. Reward/Punishment Systems Assessment, rewards and punishment are some of the important aspects of human resource planning. After monitoring the performance of employees and assessing their performance system of rewards and punishments must be ensured. The system of evaluation would include collecting information from the management and providing feedback to the employees. The rewards would be consistent with the contribution of the staff towards the organisation or moving the organisation towards its goal. The rewards system would be in accordance to the legal regulations and the company’s ability to pay. The system of evaluation and incentive forms a critical factor in the organisational analysis. Moreover, it remains associated with the overall performance of the organisation. The assessment involves aligning the organisational needs with the job demands (International Development Research Centre, n.d.). First of all, the organisation would have to set performance criteria against which the rewards would be presented. It would have to develop a rating system for the different jobs. On achieving the desirable points, employees would be rewarded adequately. In case the employees are not able to attain the desired results, he would be punished by working extra hours. However, he would not be penalised. Instead of punishing, the organisation must work towards increasing efficiency of the employee by providing him with the required training. Implementing a variable system of compensation is also recommended. This would ensure direct correlation between the performance and compensation of the employees. A properly framed compensation structure helps to make employees more competitive and consequently add to the competitive advantage of the company. Moreover, it must also be understood that every individual may not be motivated by the same rewards. Money would motivate some people but not for others. Some would be motivated by positions and prestigious titles. Thus, the organisation would have to formulate the incentive system based on the characteristics of employees. A poorly framed incentive structure results in absenteeism and corruption (International Development Research Centre, n.d.). Summary The project begins by making an analysis of the market structure of the hospitality industry. The Jumeirah Hotel based in Dubai has been looking to expand its operations in India. India is a country where the hospitality sector has been growing rapidly and is considered to be the favourite destination for a number of hospitality organisations. It shows great potential for the hotel to grow and succeed in the country. The demand for hotels has risen significantly in the country as evident from the higher number of occupancies a rising room rates. The revenues earned from the hotel have also risen by 29% since 2001 to 2004. This has been one of the key reasons behind the company’s starting to operate in India. India also provides a huge labour pool for employment in the industry. Moreover, here the people may also be employed at lower salaries in comparison to many other countries. The latter part of the project focuses on the human resource planning for the organisation. Firstly, the organisational structure has been presented with the various positions and the associated responsibilities. A recruitment and selection strategy has been formulated for the proper screening and evaluation of candidates in the organisation. The position of front office executive has been chosen as an example in the project. The strategy formulated has also been in favour of the position of the front office executive. It presents ways of attracting talents for the company from college campuses and other sources. It uses both the social media and web portals for attracting employees. The performance management of the company includes setting target for the positions and evaluation of performance as against the targets. The compensation structure is framed to motivate the employees. The structure includes a proper reward system designed to enhance performance of the employees. The company has designed a training program for those who are not able to achieve the said targets. The company also has an induction training program for the new candidates joining the organisations as well as the existing employees. The overall training and development is aimed towards enhancing individual performance and adding to the competitive advantage of the company. The reward system is also framed considering the company’s mission and ensuring that it would help the company to achieve an extra edge over its competitors. References Bhasin, L. No Date. Labour and Employment Laws of India. [Pdf]. Available at: http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN029043.pdf [Accessed on December 27, 2010]. Burtonshaw-Gunn, S. 2009. The Essential Management Toolbox: Tools, Models and Notes for Managers and Consultants. John Wiley and Sons. Cannon, D. F. 2002. Training and Development for the Hospitality Industry. [Online]. Available at: http://shop.ahlei.org/Training-and-Development-for-the-Hospitality-Industry_p_2413.html. [Accessed on December 27, 2010]. 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