BBPS4103
BBPS4103
fathimath ABDUL Sattar
S1404021286
BHRM 08 fathimath ABDUL Sattar
S1404021286
BHRM 08
Strategic management
Maldives tourism development corporation plc.
Strategic management
Maldives tourism development corporation plc.

Contents

INTRODUCTION 2 MTDC Core Strengths 2 Vision 3 Mission 3 Business Principles and Strategies 3 ELEMENTS OF STRATEGIES 4 CONCLUSION 9 REFERENCE 10

introduction
When tourism was introduced in Maldives in 1972, tourism pioneers had strived hard to uphold the industry which was started from nothing. Today tourism had become the main source of income and prosperity to Maldives. MTDC was establish to structure and develop tourism industry of Maldives while protecting and preserving the nature. Government of Maldives established MTDC as the first public company for tourism development on 9th April 2006. MTDC had aimed to make every citizen of Maldives as their shareholder, in order to have a reward from the industry. They envision Maldivian to invest in tourism. Today MTDC ensures that every shareholder of the company have a proper distribution of shares.
MTDC intends to provide tourism development to all the corners of Maldives so that communities can gain direct and indirect benefit. Moreover to outsource operations of resorts to local community so that would have more opportunities for employment.
MTDC Core Strengths

* Management Team
The organization understands that a good leadership is the key for a successful organization. Therefor they have select professional skilled leaders for their development projects. * By the for the people

For a sustainable economic policy and to bring positive impact from tourism industry, MDTC’s main purpose is to give back to their investors. They are committed to their shareholder and the citizens of Maldives even though they are running as a profit oriented company. * Core Values

* Continues protections of shareholders and investors * Open minded and transparency of the organization * Challenges the status-quo * Individual respect and care * Being candid as a way of life
Vision

MTDC envisions becoming the most efficient Public Limited Company in the Maldives, by leveraging its core competencies and financial strength to achieve the expectations of shareholders and stakeholders to enhance the macro and micro economic potentials of the tourism industry. (Maldives Tourism Development Corporation, 2008)
Mission

MTDC’s Mission is to source diverse investments and efficiently deploy its resources to ensure that the investment yields the highest returns which will maximize the wealth of its shareholders. (Maldives Tourism Development Corporation, 2008)
Business Principles and Strategies

One of their strategies is to provide a dividend range which is above than the market range. This will help shareholders to achieve speedy benefit from tourism and be satisfied with organization. They also wanted to be tactful about the policies and procedures so that it will last for long and sustainably maintained. They have also stated that they desire to have centralized knowledge flow and decentralized operations. This strategy interprets that the organization empowers their employees with the help of provided knowledge from the organization.
More over MTDC inspect the market changes and create a competitive edge beforehand. Develop their strategies and assets for the risk that relates to their business. Reducing the cost of the organization and gain high efficiency meanwhile protecting the organization from any potential disaster in the industry. Maintains the ethic of the company, attaining economic and social benefits. MTDC wants to sustain and create a knowledge based workforce for the success of the company.

ELEMENTS OF STRATEGIES

One of the elements in strategic Management is strategy formulation. In this component vision, mission, goals and strategies an organization becomes the key components. These components are formulated through internal and external analysis. Industrial and competitive analysis is also carried before forming the organization. Moreover the organization needs to identify the reason why they selected the strategies and rectify the alternatives too.
Second element is regarding implementation of strategy. There are main three key components that needs to be considered when implementing the strategies. That is organizational structure, people and leadership and finally organizational system and process.
Third element is strategy evaluation and how the organization has its control on the strategy. In this area the organization needs evaluate on the model they implemented and processes. They should also evaluate on the criteria’s and how they control them.
MTDC was established with their vision focusing on their main reason of establishing the organization. That is to maintain the tourism of Maldives which was founded with the hard work tourism pioneers. And it has become key development Maldives. MTDC claims that they are expecting to become the most efficient organization in helping to serve this main key of development. They wants to achieve by making an equal competencies and providing financial strength to shareholders and stake holders to reach their target. That would help to enhance the tourism industry of Maldives.
MTDC continued with their vision statement since they established in 2006. They introduced their mission statement in 2009. Since then their mission statement did not change.
In order to implement their vision and mission MTDC has taken certain steps. They implemented their vision by signing 9 island leasing agreement. Before implementing their vision they monitored about debt to equity ratios and debt to asset ratios. This is to ensure the commitment of suppliers, landers, creditors and obligors by the organization commitment. MTDC decided to divide the project into different development methodologies due high risk in development and dept consideration.
The figure below shows the way MTDC managed the project.

Herathera Island Resort was the first resort project leased by MTDC in 11th of April 2006. This resort became the first resort that to be built in Seenu Atoll. The resort started their operation in 23rd of December 2007 with 546 beds. This became a golden opportunity for the community around the island to seek job from the resort. Moreover MTDC opened the opportunity for opened public tender invitations for bidding on sublease. This was opened for local and foreign individual and companies. After the second opened public tender the island was subleased for 20 years to operate by the public.
The fundamental steps taken by MTDC resulted showing that they had achieved debt-to-equity ratio of less than 1, showing that they had a healthy financial strength. By the year 2009 the organization faced the global downturn which lead to minimization of financial lending from banks. As a result the organization faced complications in completing their projects and obtaining depts. However MTDC managed to complete 2 properties and started operating before the end of 2010. Despite of the decisive financial environment, the organization managed to achieve a revenue of Rf 248.1 million. It is 8% decline than 2008. One of main downfall which caused the decline was the disruption of Herathera Island resort, the first project which MTDC undertook. The situation resulted showing profit loss from Rf 119.8 in 2008 to Rf 101.6 million in 2009.
However during 2010, MTDC managed to handover Herathera Island Resort to Onyx Hospitality Group of Thailand to manage as an operating partner. MTDC business condition continued failing resulting a loss of 11.2% to Rf. 220.3 million. These financial loss and change in Maldives tourism law, forced MTDC to change their strategies to get adapted to the business environment. Under the new business strategies MTDC sold the ownerships of projects which was running in loss. The result was benefited by earning $879,024 more from 24.9 million dollars loss. By 2013, MTDC had a profit of 4.7 million US dollars. However by 2014 again the organization showed a loss due to high court’s decision on favor of Resonance Pvt. Ltd to pay $ 5.2 million. Resonance Pvt. Ltd had a sublease agreement between MTDC on developing GA. Kondeymatheelaabadhu as a tourist resort.
As per 30th June 2015, there are 5 resort development project on going. They are N. ekulhivaru, B. kihivah huravalhi, G.DH magudhuvaa – Ayada Maldives, H.DH naagoashi and DH. embudhufushi and olhuveli. These resort developments are ongoing through sublease and joint venture partnership.
As per the mission of the organization is to provide resources and opportunity to multinational investors where they can achieve the return of the investment by increasing the wealth of the shareholders. As MTDC is actively involved in the tourism industry of Maldives they aim to develop eco-friendly resorts where the visitors can enjoy Maldives in an environmental friendly style. Currently in a developing world, tourism is emerging in a rapid speed. Therefor tourism in Maldives has be maintained and developed to survive in the market. There are investors who are interested to finance in Maldives of tourism. But these investors will only take their risk if they can be sure of return. MTDC dreams to share this return among the shareholders of the organization. That is path where the organization can remain with the strength of the shareholders.
To implement their mission, MTDC aimed to make every Maldivian as a shareholder of the company in order own the benefit from Maldives tourism. MTDC decided to issue their shares at MRF 100.00 with a limitation of 1,000 shares per person. In 2007 first period MTDC sold 1,145,210 shares drawing approximately MRF 100 Million. Share capitalization of MTDC reached MRF 981,372,910.00 by June 2008 which became the highest equity compared to other companies. MTDC share later reached to MRF 400 but later stabilized to MRF 213 per share. By 2007, 66,000 shares was traded to Maldives Stock Exchange floor. By 2009 MTDC had 24,000 shareholders recording earning of RF 45.6 per share. The government new capitalization, companies share capital increased from Rf 181 million to Rf 243 million. The shares was sold for Rf165 (face value Rf100). Even after the global economic downturn MTDC managed to increase shareholder equity to 5%. That is Rf519 million.
In addition due to the new changes brought by the government, earning per share decreased to Rf29.70 in 2010 from Rf45.60 in 2009.
Unfortunately, by the year 2014 due major loss in organization in 2013, MTDC decided to recline on distributing profit share. In 2013, retained earning reserve showed negative. By end of 2014, an average of MRF 10.63 per share was sold. The highest reached to MRF 20.
MTDC has develop 11 business strategies to fulfill their mission and vision. MTDC understands the socio-cultural impacts of tourism to the host community. In order to reduce these impacts MTDC decided to take part in cooperate social responsibility (CSR). MTDC aimed to treat all employees and shareholder fairly. Moreover to treat ethically towards local community. They strived to prevent and protect the community from deterioration of culture and loss of habitat. They ensured the participation of local community in tourism industry by actively involving in local community business and provide employment opportunities to surrounding community. This strategy was implemented through providing 100 percent local employment in Herathera Island Resort. This approached was benefited by gaining over MRF70 million to the community through wage. It was massive development to local community leading to growing of new business and improving community wealth.
In 2008, MTDC implemented health insurance policy for their employee. In addition, MTDC funded MRF 1.2 million to CSR and started working on employee pension fund. In 2015, under CSR project MTDC provided MRF 5818.01 to Gaza fund. Moreover, they provided a fund of MRF 100,000 to Male’ water crisis in 2014.
MTDC employed 23 employees at the end 2008. They spent MRF 1,481,749 as salary and wage on this year. Also MRF 45,094 as training expenses. In 2014 MTDC had 24 employees. They encourage scholarship training programs from abroad. However during 2013 they reclined on overseas training due to major loss on the organization. They also inspire on speaking employees opinion regarding the organization and their concerns. However if any employees feel uncomfortable to communicate openly they are advised to post a letter writing “for eyes only of” in front of envelop and deliver to any specific Director or Management. Nevertheless, in 2007/2008 MTDC uphold an investigation regarding 3 cases of fraud. This lead to discharge of 1 employee.
Overviewing the situation of MTDC it is recommended to implement stronger and wise strategies to maintain control in their vision and mission. The organization has faced many downfalls and challenges to implement their strategies due impacts from external environment. The organization was established with hopeful and righteous endeavor. MTDC can implement new strategies and increase the level of employees so that they can have wider span of control on their vision and mission. MTDC needs to improve the involvement shareholders in order to have more opinions and ideas in developing tourism of Maldives.

CONCLUSION

As Maldives tourism has become one the main source of income in the economy, it needed guidance to give a form and structure to strengthen. With vision of sharing the wealth of tourism to every citizen of Maldives, MTDC was founded in 9th April 2011 as the first public company for the purpose of developing tourism industry in Maldives. In 2009 MTDC mission to help in providing resources for the development of tourism. Also to ensure that the shareholders benefits from highest return.
In order to fulfill their vision and mission, government offered 9 islands to develop as resorts. After several research on risk factors MTDC decided to fully own 2 islands for development and to release the rest of the islands to sublease and joint venture partnership. As the project of resort development, MTDC opened Herathera Island Resort on 23rd of December 2007 with 546 beds. After 2 years MTDC opened the resort for sublease to the local public for 20 years.
By the year 2009, the organization confronted a major profit loss due global economic downturn. However they were able to put 2 resort on operations. And in 2008 there was a decline profit to 8%. In 2010 MTDC contracted Herathera Island Resort to Onyx Hospitality Group of Thailand for operation. Currently this year MTDC handles 5 islands to develop as resorts under sublease and joint venture methodology.
Under the mission of MTDC implemented a policy on selling shares. At first they sold a share for MRF 100 in a limitation of 1000 shares per person. By 2008 share capitalization reached to MRF 981,372,910.00. Due new government share policy decreased to Rf29.70 in 2010.
MTDC is committed to CSR policy where they implemented health insurance policy to employees. They introduced numerous employment opportunities to local communities and actively involved in the community business. Moreover they contributed MRF 100,000 to Gaza fund to help the Palestinians. In addition they also helped to Male’ water crisis in 2014 under CSR project. Currently the organization has 23 employees.

REFERENCE

* Maldives Tourism Development Corporation, 2008. Annual Report 2008, Male': M.T.D.C. * Maldives Tourism Development Corporation, 2009. Annual Report 2008, Male': M.T.D.C. * Maldives Tourism Development Corporation, 2010. Annual Report 2008, Male': M.T.D.C. * Maldives Tourism Development Corporation, 2012. Annual Report 2008, Male': M.T.D.C. * Maldives Tourism Development Corporation, 2014. Annual Report 2008, Male': M.T.D.C. * Maldives Tourism Development Corporation, 2015. Annual Report 2008, Male': M.T.D.C. * Maldives Tourism development Corporation, 2015. About Us. [Online] Available at: http://www.mtdc.com.mv/en/about-us/[Accessed 5 10 2015]. * Maldives Tourism Development Corporation, 2015. Developments. [Online] Available at: http://www.mtdc.com.mv/en/developments/ [Accessed 10 10 2015]. * Limited, A. (2015). MTDC sells Herathera Island Resort to Singapore’s Canaries Pvt Ltd | Abode Paradise - Maldives. Abodeparadise.com. Retrieved 10 October 2015, from http://www.abodeparadise.com/view-article/333/mtdc-sells-herathera-island-resort-to-singapore%E2%80%99s-canaries-pvt-ltd