Corporate and Business Strategy Week 6

Case Discussion: Shangri-La Hotels (HBS 9-108-006)

What is Shangri-La’s corporate strategy? Has it been successful? Why?

To maintain “Shangri-La Hospitality” standards in the midst of rapid expansion from Asia to Europe, Australia and North America.

Shangri-La different itself through its excellent Service model known as the “Shangri-La Hospitality” that is based on traditional Asian hospitality. There are around five core principles: respect, humility, courtesy, helpfulness and sincerity. Each of the principle is adapted to the local culture and practices.

Delegation of Authority (used the 5-level organizational design) to group the employees into 5 tiers. Each level has separate guidelines, discretion and the amount of money they can use to handle customer requests that were outside normal operational guidelines.

It works in other parts of the world but has difficulty in implementing it in China.

Training facility “Shangri-La Academy” was set up to standardize the training and to maintain consistent service quality across Shangri-La hotels for a rapidly growing workforce (from 10,000 to 19,000) almost 90% growth.

What are Shangri-La’s strategic growth portfolio. What are the assumptions and competitive bases for such a rapid expansion plan?

Evaluate Shangri-La’s strategic growth portfolio. What are the assumptions and competitive bases for such a rapid expansion plan?

What are the issues and the potential risks of the growth strategy? How should Shangri-La manage the challenges in order to achieve its strategic intent and mitigate the risks?

The issue of maintaining the “Shangri-La Hospitality” standards.
With the increase competitors in China, they are pouching the trained staff.
* Clear career path with lateral career paths
Long term compensation plan for the employees
Finding ways to use technology to replace human input while maintaining the service quality and increasing customers to employee ratio

Increase labour costs thus it is difficult to maintain the employee : customer ratio
To standardize the consistent service quality while adapting the local culture and customs (e.g. China employees difficulty in making autonomous decisions. To set up a training academy in North America to further to exploit the growth opportunities in North America.
More role plays to stimulate real-life situations to allow Chinese has more practice to autonomy
Cross pollination to exchange the staff between geographical locations. To introduce a multicultural environment.
Have a detailed recruitment process to staff that shows more initiatives.