Roaring Dragon Hotel (RDH)

Situational Analysis:

RDH was a state owned enterprise. The decision making authority was Erhi T and the provincial
government. It was one of the original three-star hotels in south-west China and was one of the region’s
premium guesthouses. It shared a great reputation among the public. The region was slowly moving from
a mindset of planned economy to a market economy.

The planned economy setup did not go in tandem with present management style of RDH. Thus, the need
arose that the management practices at the hotel needed to be revised in order to realize the full potential
of the hotel.

Hotel International(HI) was identified as a right organisation to take over management of the RDH. In
April 2002, the transition began. Paul Fortune, GM appointed by HI, was at the helm of affairs to
facilitate the transition.The team introduced changes which lead to negative results; both
financially and in terms of employee motivation. The reinstatement of the old management
helped to get results immediately.

SWOT Analysis:
Strengths: Weaknesses:
- 50 years of experience in Hospitality - Traditional management style
- Strong industry connections of - Employees doing personal business
employees (Guanxi) while working hours
- Relaxed organisational culture - Lack of professionalism
- Feeling of privilege associated with - Less number of English speaking
working at RDH employees
- Presence of old-Chinese wing and a - Nepotism in the employee recruitment
modern western wing

Opportunities:
- Rise of the market economy
- Expansion to a 5-star International Hotel
Threats:
- Decline in popularity and income
- Need for modernisation
- Takeover by International hotel chain
- Business dependent upon employee
connections
Problem Statement:
Roaring Dragon Hotel is going for a complete culture change. The results, however, were
disastrous. They reinstated the old management. However, the challenge is that they have
resisted change vehemently now. Till what time will they be able to resist such changes given
the environment is highly dynamic.

Alternatives available:
● No Change: RDH had decided to terminate the contract with HI and it showed
immediate good results. Few of the retrenched employees were called back and the hotel
earned back its customers, resulting in higher occupancy rate. Thus, the hotel can
decide to keep its existing planned economy-backed Chinese culture and rely on the
traditional customer base only.
● Keeping Chinese roots with modern outlook: The hotel has already faced a drastic
attempt at organisational change and might want to hold onto the existing culture for
some time. However, seeing the prevalence of market economy, the loss of sales is
inevitable and it would need to start making changes in the next few years. These changes
include but are not limited to the following:
- Training existing employees: Employees need to be trained in a more structured
manner in order to increase their productivity and serve more international
customers. It is essential to make the employees ready to work within a structured
international organisational culture.
- Streamlining the workforce: The hotel employed 675 employees which is a huge
number. With time, some Voluntary Retirement Scheme can be used to reduce
this number. This way the older and comparatively inefficient members may leave
by choice and might also be ready to pass on their guanxi to the rest of the
employees.
- Recreational activities: If some recreational and relaxing activities are held at an
organisational level, then the employees might not feel the need to play cards and
watch television in between their working hours. Such activities could be reserved
for break time, so that the productivity is not affected.
- Working on the “old Chinese wing”: The local Chinese clientele preferred the old
wing of the hotel as compared to newer and western wing. This could be used as a
competitive advantage and improved upon in order to increase the profitability
from local customers and put that towards renovating the modern section.
● Takeover by some Chinese International Hotel: RDH has the option to again go for an
attempt at internationalisation by being acquired by some Chinese hotel giant. This would
resolve the problems faced while working with HI namely, British management,
International payments and cross-cultural dynamics. A Chinese corporate would be
working under similar conditions and could perform the task of modernisation better.
● Bringing complete modernisation to RDH: The hotel may decide to give in to the
growing market forces and work towards converting itself into a westernised and higher
quality providing hotel serving more international customers. This might require
calling out another corporate to takeover the task of making fundamental changes
 including more dynamic & efficient employees, modern dining place & rooms and a
structured international organisational culture.
Criteria for Evaluation :
The following criteria needs to be while choosing the right course of action.
1) Employee participation and productivity: Organisations are made up of people and
their relationships with one another. Increased participation among employees will help
him estimating the effectiveness of any change brought in the organisation.
2) Industry ties : Chinese restaurants are shown to work in close tandem with other partner
industries like the tours and tourism companies and therefore maintaining ties with them
is of utmost importance
3) Resonance with Chinese culture : Every country has its own set of culture and
traditions, not respecting a certain country’s culture and making changes that is not in
line with the same. Might result in resentment and overall failure of the strategy.
4) Social capital - Guanxi: Guanxi can be defined as the the personal networks and
relationships over which a person has influence. Roaring Dragon Hotel’s employees used
guanxi to secure their position and to get more business to the organisation.
5) Loss of power and status: Due to the intervention of HI, senior employees felt that their
control got restricted and they lost their power in the hotel. In such a scenario, it is very
difficult to deal with these people as they can cause resistance.
6) Ease and feasibility of implementation: Changing culture can be difficult because it
challenges people’s core values and established ways of thinking and doing things. Ease
of implementation and time for adjustments need to be factored in based on the level of
urgency of the situation.

Evaluation for Alternatives:

Alternative 1: No change: Terminate contract with HI

Criterion 1:Employee participation and productivity: Employees felt proud to secure a position in the hotel.
The working conditions and benefits were better than its competitors. The organisational culture was also relaxed
however the productivity was low.

Criterion 2: Industry ties : With the previous management reinstated there is a high chance of relationship
fostering back to normal with Nu fu travels. And since it would be a chinese management they would try to repair
the damage done by the UK based management practices.
Criterion 3: Resonance with Chinese culture : If the previous management is reinstated the chances of the who
team being back to the chinese culture of giving more importance to the employees and appreciating humans more
than profit would come back.

Criterion 4: Social capital - Guanxi: Guanxi helped the employees in climbing up the hierarchical ladder
through the use of their personal connections. Though it was efficient in getting more business to the hotel, it did
lead to inefficient employees who only relied on their connections.

Criterion 5: Loss of power and status: Since the original model of the hotel was brought back, there was no loss
of power or status among the employees.

Criterion 6: Ease and feasibility of implementation: Ease of implementation will be very high as the employees
liked the culture of the hotel and would not resist to this decision.

Alternative 2: To keep Chinese roots with modern outlook

Criterion 1: Employee participation and productivity: Employees morale can be increased by providing them
with structured training sessions. Through the introduction of some recreational and relaxing activities held at an
organisational level, the employees might not remain idle in between their working hours thereby improving the
productivity.

Criterion 2: Industry ties: The previous management will be reinstated and thus there is a high chance of
relationship fostering back to normal with various other stakeholders. And since it would be a chinese
management they would try to repair the damage done by the UK based management practices.

Criterion 3: Resonance with Chinese culture : Since the old chinese management team is back in place they
will try to bring back the culture along with the move. Although the modernisation process will be undertaken but
with the subtly and respect for the chinese culture

Criterion 4: Social capital - Guanxi: Since the chinese outlook is to be maintained, Guanxi can be used to get
more business to the hotel. But the modern outlook will not let the employees use their connections in getting an
upper hand at the workplace.
Criterion 5: Loss of power and status: The hotel will witness certain loss of power and status as few employees
might leave the hotel under the Voluntary Retirement Scheme. Also the efficient employees who get through the
training sessions will get more say in the hotel matters.

Criterion 6: Ease and feasibility of implementation: The management might face some problems during the
implementation due to the resistance by the employees.

Alternative 3: Takeover by some Chinese International Hotel

Criterion 1: Employee participation and productivity: Employee sentiments will be high under this alternative
as the employees were accustomed to the chinese way of management. Through modernisation of tasks their
efficiency will be increased and better decisions can be taken.

Criterion 2: Industry ties: Industry ties are bound to improve with the incoming hold of an international hotel.
There would be new and better connections that are brought to the table due to the takeover.

Criterion 3: Resonance with Chinese culture: Since the international hotel is based out of China, we believe
that the focus would be on creating a melting pot of chinese and international culture which would be refreshing
welcome for both the International and domestic customers. Although this also runs the risk of losing hardcore
customers that hold strong chinese values.

Criterion 4: Social capital - Guanxi: Since the new management is also from China, the concept of Guanxi is
relevant. This will help in the growth of the hotel. But the modernisation of the hotel will not let the employees
idle around and use their connections in their career growth.

Criterion 5: Loss of power and status: The hotel will witness certain loss of power and status as the old
management will be taken over by the international chinese hotel chain. The new team will be taking all the
decisions to bring efficiency in the organisation.

Criterion 6: Ease and feasibility of implementation: The management might face some problems during the
implementation due to the introduction of the new management team. But the resistance faced will be
comparatively low as the work culture will be similar to the older model.
Alternative 4: Bringing complete modernisation to RDH

Criterion 1: Employee participation and productivity: A complete modernisation to RDH will lead to stricter
norms in the workplace. This will increase the bars for passing the training sessions. Since the aim is to provide
quality services to international customers, the employees would have to go through massive change to adapt
themselves to the set criteria. This may not necessarily increase productivity as it is not a gradual change and
would completely disrupt the employee’s schedule.

Criterion 2: Industry ties: Complete modernisation might mean severing a couple of ties that relied on heavy
discounting, basically complete modernisation might hamper the socialist outlook the restaurant currently has.
This might help in case the government wishes to open the gates to the world, but might backfire otherwise.

Criterion 3: Resonance with Chinese culture: Complete modernisation might come at the cost of complete
culture. This move is analogous to the one undertaken by the HI, which didn’t end well. Although the intentions
were good, the move has to be taken with utmost care and sensitivity towards the culture.

Criterion 4: Social capital - Guanxi: In such a case, Guanxi will become irrelevant. The international hotel
brands will not consider private connections. They work professionally according to the set standards.

Criterion 5: Loss of power and status: there will be a complete loss of power and status. Old employees who
might prove to be inefficient will be asked to leave. Even a completely different management team will takeover
which will result in loss of power of the older team.

Criterion 6: Ease and feasibility of implementation: The feasibility and ease of implementation is low. The
management will face high resistance from the employees. Moreover for such a change, huge resources will be
required.

‘Who Moved My Cheese? An amazing way to deal with change in your work and in your life’
by Dr Spencer Johnson
'Who Moved My Cheese' is a classic that is famed for its structural reorganization theory that
helps portray unfavorable changes optimistically. It is a fable about four characters who live in
a maze with an abundant supply of cheese. One day when the cheese disappears, two of them
who had anticipated the supply decline are mentally prepared. However, the other two feel
betrayed and complain, wasting their time in the hope that the cheese will return. Eventually,
one of them realizes that the cheese will not return and sets on a quest in search of cheese while
writing his learnings on the wall.
The learnings are: 'Change happens,' 'Anticipate change,' 'Monitor change,' 'Adapt to change
quickly,' 'change,' and 'enjoy change.'
These learnings are relevant to the roaring dragon case as well because presently, the
management halted the modernization; however, avoiding the growing market forces for long
would not be beneficial for the hotel in the long run. Thus adopting the same learning in this
context would yield improved results.

Lewin’s Change management model: Unfreeze, Change, Refreeze

Concept of change management is relevant with almost all businesses today, however how the
change is managed is of enormous importance. Kurt Lewin, in 1940, developed the Unfreeze -
Change - Refreeze model using the analogy of changing the shape of a block of ice.
Unfreeze: Preparing the organization to accept change is necessary which involves a message
explaining the need for change. In the present case, this step was ignored and processes for
change were directly started, disregarding the employees.
Change: In this stage, people begin to resolve their uncertainty and look for new ways to do
things. However, the transition from unfreeze to change does not happen overnight and takes
time. In the roaring dragon hotel, an attempt to accelerate the change was made which resulted
in confusion among all stakeholders.
Refreeze: When the changes are taking shape and people have embraced the new ways of
working, the company is ready to refreeze bringing back stability to the organization. Changes
should be anchored into the culture and new ways to sustain the change should be developed.

Final Decision: Alternative 2 - Keeping Chinese roots with modern outlook

Considering the above analysis, it is obvious that alternative 1 and 4 would not be effective.
Having no change at all, as suggested in ‘Who Moved My Cheese’, would render our hotel
ineffective in contrast to the growing market whereas complete modernisation would be a
cultural misfit and would not be able to sustain. Alternative 3 also holds the risk of not being
able to blend in with the Chinese culture.
Considering all this, alternative two appears to be the best option forward. By keeping chinese
roots with modern outlook we ensure that we keep the various Chinese practices that are valued
by our customers while at the same time ensure efficiency and growth. We suggest hiring a
consultant that is well versed with the Chinese culture to suggest the organizational structures
needed. Moreover, we believe that all the stakeholders, including the employees should know the
reason for change and should be involved.
Contingency plan :