Greenway Hotels PLC is the owner of more than 60 hotels in United Kingdom. Greenway Hotels PLC bought over a small hotel chain headquartered in Germany. CEO of Greenway decided that half of the new hotels in Germany would be retained and rebranded as part of the company; the other half will be sold. This will support Greenway’s strategic objective of growing the organization slowly to make sure that new ventures are well supported and opened on time and on budget. The organization has decided to initially use an ethnocentric approach and send some of their existing UK-based managers to Germany to begin the operation in Germany with the ambition to own 150 hotels in the next five years. Their 10-year plan is to own 300 hotels across Europe. This is an ambitious target, so it is important that the organization finds an effective formula to operate successfully in other countries.
Greenway Hotels used ethnocentric approach which is a business approach whereby they bring UK managers into Germany. By using this approach Greenway There is also a missed out the opportunity to hire the best personnel from the host country. Each country, especially Germany have qualified and talented management who knows German Hotel industry from A to Z, but with ethnocentric approach Greenway is losing the opportunity to hire best valuable personnel to rebrand and operate in Germany. The supervisors of such key methodologies have a tendency to expect that what works at home will work abroad. Doesn’t take a c-level expert to perceive that is a way to disappointment today, or possibly stagnation, much of the time, especially with the availability of the Internet successfully letting consumers to learn from there.
As it is well known, bringing expatriate managers is costly to the company, due to legal permits and so on. .When using ethnocentric approach the failure rate is very high. This approach is workable in a situation when a new business is set up in the host country and the managers of the parent company visit there and initializes its operations. Nearly 80% of midsize and large companies currently send professionals abroad and 45% plan to increase the number they have on assignment. On average, foreign managers cost a few times what they would in a same position back home. A completely stacked foreign manager package including benefits and typical cost for basic items costs somewhere in the range of $300,000 to $1 million every year, presumably the single biggest consumption most organizations make on any one individual with the exception of the CEO and 20 % of American supervisors returned again from remote nations because of disappointment and challenges in altering in outside nations.
Missing out to hire the best talents in Germany might cause failure in establishing and rebranding Greenway PLC. German managers are extremely qualified, well educated, strategic, German wold famous companies like BMW, Mercedes, PUMA, and Schwarzkopf have proven that. “Germany is most populous country and has the largest and most powerful national economy in the Eurozone. This, combined with the fact that Germany is the world`s third largest market for imported goods, makes it a particularly attractive market for UK companies with global aspirations.” (Marc Jarrett, 2013). No doubt Germans know how to grow and operate businesses so Greenway Hotels is losing a chance to hire potential German managers. UK managers might not know the needs and preferences of the host country for example Nissan’s initial global operations as being ethnocentric, in that they didn’t plan autos particularly for, say, the United States; they sent out autos that were intended for use in Japan. The creators give a diverting story, wherein the automaker conceded that they felt that since Japanese proprietors would put covers on their auto hoods in the winter to keep them sufficiently warm and that Americans would do a similar thing which is wrong because different countries have different preferences due to climate, culture, economy, pollution and so on.
As it is mentioned before, bringing foreign managers is extremely costly and is beneficial only in some circumstances. Working visa, tax regulations, accommodation, travelling expenses are all causes of high cost of bringing UK managers who will also spend time to research the German market, finding German staff for their new hotels. As it was mentioned previously it`s 3 times more expensive to bring expatriate managers than hiring local managers. Greenway has too limited time for rebranding and no staff to complete their goals. Greenway Hotel has put the goal to own 150 hotels in 5 years. Their 10-year plan is to own 300 hotels across Europe.
Polycentrism is the conviction that managers and representatives in an outside operation must to be from the host nation. The belief is that individuals local to the host nation won’t have issues with culture stunt , knowing the dialect, acknowledging and sticking to the nearby traditions, qualities, and dispositions, and being taking effect right now rather than after a learning procedure has occurred. Enter positions in the outside operation are filled with local managers. This spares cash related with enrolling, preparing, and exchanging ostracizes from different nations in which the organization likewise has operations. There are, nonetheless, negative parts of a polycentric approach is hiring. One of the most concerning issues identifies with parent organization control over with their own interests and ignoring the parent country`s interests. The inquiry emerges: “Will managers be faithful to the parent or to the host country operations?” A potential issue emerges with coordination of exercises, objectives, and goals among parent and host. However, polycentric staffing and operation of outside backups is effectively being connected by associations. The parent organization must know about potential issues and acquaint control frameworks with these issues before they are get out of control.
It is extremely fruitful to rebrand Greenway Hotel in Germany using polycentric approach because who knows better German market then Germans? Here is the good example is polycentric approach in action: In the UAE, foreign administration arrangement in HRM is on make sure foreign managers succeed in oversee country. In staffing, HR supervisors would be worried about how to bring expatriate managers to the UAE and how to guarantee that these managers will execute successfully as expected in the UAE.
The foreign administration arrangement in the UAE would likewise reduce and control the number of foreigner labourers in key positions in the association. The UAE government supports and allows permits for foreigners in top managing positions. The association of host country likewise has the advantage of hierarchical learning of new information from the parent country in the UAE. The staffing strategy approach appropriate for the UAE is either polycentric or ethnocentric. The last decision relies upon the particular needs of the association at the particular timing.
Lodging market in Germany is confronting some significant changes: inside the following five years the market structure will be recently composed. Particularly the extensions by universal inn networks and the altogether changed quality necessities of the objective and style of consumers and additionally the deals weight because of creative booking innovations through online that pressurize set up lodgings. Germany is home to tens of thousands of businesses ranging from small sole proprietorships to large conglomerates. The German government supports all types of businesses whether or not it is German or foreign business. “Tourist Arrivals in Germany increased to 35555 Thousand in 2016 from 34971 Thousand in 2015. Tourist Arrivals in Germany averaged 22276.96 Thousand from 1992 until 2016, reaching an all time high of 35555 Thousand in 2016 and a record low of 14347 Thousand in 1993.” (tradingeconomics.com, 2017) So with all that data it is clear that Germany is fruitful for hotel business as it has lard number of tourists visiting each year. Germany is 3rd most visited country in Europe which makes Greenway Hotels to consider expanding in Germany. I would recommend for Greenway to use polycentric approach which is an approach where managers of an organisation are from host country.
Nokia, previously the world’s second biggest maker of cell phones, is a decent case of an organization that viably utilizes worldwide assignments to produce learning. Not at all like most vast innovation organizations, Nokia does not depend on R&D work. Rather, it works 36 focuses in 11 nations—from Finland to China to the United States. Senior administrators examine their worldwide workforce for architects and originators who are probably going to produce new ideas when joined into a group. They unite these individuals in a R&D place for assignments of up to two years, with the express goal of creating new items. The approach functions admirably: Nokia keeps on snatching worldwide piece of the pie by quickly transforming new ideas into effective ad items. Nokia is a great example of polycentric approach which Greenway Hotels PLC can use. There are disadvantages of polycentric approach too as it disables the connections and the interests of UK company Greenway Hotels PLC. Germans may put their own interests above the Greenway Hotel`s interests that may result in failure. But that’s just some disadvantages, clearly polycentric approach has more advantages such as hiring German managers who knows the market and local need well, no expenses and time spent of relocating foreign managers,
The career opportunities and moral of local staff increases, government support and so on. Since Greenway Hotel PLC already decided to use ethnocentric approach and ready to send their managers to Germany, I recommend them to extend time of due dates because managers need time to adjust and learn German language and culture and consumer behaviour. Never the less they need time to find and hire local staff for their new hotels; their admission to open 150 hotels in 5 years is not going to be successful if they don’t consider risk factors doing business in Germany due to many regulations and permits. Just like every country it takes quite a long time to get all the legal documents, to hire, to research the market. I would recommend geocentric approach if they would initially establish and be successful in first few years because geocentric is suitable for a long run and it very costly.
There is no government guidance in business industry but there are many restrictions and prohibitions designed to protect business and non-business interests and to prevent abuses. Government policies encourage competitions so there are no monopoly firms. The German lodging market is on focus for a solid year in 2016. On both the survey side and the money related execution side most markets and sections in Germany are progressing. General most hoteliers we addressed are very hopeful about the market and advancements. As indicated by UNWTO in 2030 Germany’s inbound tourism industry could possibly achieve 121.5 million overnight stays so that positive thinking is advocated. Visitors consider the administration level of lodgings in Germany to be of elevated requirements. With that having said, hotel business is blooming in Germany as tourism popularity is high as well as business trip staying. Quality in Germany is the main aspect so Greenway Hotels PLC should consider it as their main focus in rebranding. Using polycentric approach will enable Greenway Hotel to expand and rebrand quicker and more efficient avoiding cultural misunderstandings. In most cases hotels represent the country which in this case is Germany so it would be wise to use polycentric approach.
“The German travel market is of special interest because this is a growing market in Europe. Therefore, the country is examined in greater detail. Tourism is a growing industry in Germany, accounting for 97 billion Euro of the country’s GDP (German Tourism Information, 2014). In 2010, 2.9 million people were directly employed by the tourism industry and an additional 2 million people are indirectly generating an income through the tourism industry. That accounts for about 12% of all employed people in Germany (BMWi, 2012). Furthermore, in 2013, there were 9.729 traditional travel agencies in Germany, which in relationship to Germany’s population is one of the densest networks worldwide. Overall, Germans prefer travel destination within their own country (30%), followed by the European coastlines (25%), Spain (12.6%) andlong distance destinations (7%) (German Tourism Information, 2014). The average length of a trip declined from an average of 13.8 days in 2000 to an average of 12.4 days in 2013. With the overall travel expenditures still on the rise, it seems as if trips are becoming more frequent but shorter (German Tourism Information, 2014). ” (Sandra Maria Correia, 2016) The statistics by German Tourism Information states that more and more tourists are visiting Germany, thus more hotel chains are opening. Greenway Hotels has a big opportunity to do well in Germany as long as their execution ability is strong.
Brewster, C. (1997). International HRM: Beyond expatriation. Human Resource Management Journal, 7(3), 31.
Brewster, C., and Scullion, H. (1997). A review and agenda for expatriate HRM.
Human Resource Management Journal, 7(3), 32-41.
Bootsnall 2014. http://www.bootsnall.com/aboutus.shtml
BITKOM 2013 (2014). Trends in E-Commerce, in: http://www.bitkom.org/files/
BMWi 2012. Wirtschaftsfaktor Tourismus Deutschland, in: http://www.bmwi.de/
Chang, L. ; Chieng, H. (2006). Building Consumer-Brand Relationship: A CrossCultural
Experiential View. Psychology and Marketing, 23(11), 927-959.
Christopher, M., Payne, A. ; Ballantyne, D. (1991). Relationship marketing. London:
Butterworth Heinemann. Content Marketing Institute 2014. http://contentmarketinginstitute.com/what-is-contentmarketing/.
German Tourism Information 2014. Fakten und Zahlen 2013.
Ingemar Torbiörn, I. (1997). Staffing for international operations. Human Resource
Management Journal, 7(3), 42-51.
J. Steward Black. (1999). The Right Way To Manage Expats. Available: https://hbr.org/1999/03/the-right-way-to-manage-expats
Larry Elliott. (2016). The UK could learn a lot from Germany’s long-term industrial strategy. Available: https://www.theguardian.com/global/2016/mar/30/the-uk-could-learn-a-lot-from-germanys-long-term-industrial-strategy.
M. Menushar . (2009). International Staffing Decision. Available: http://courseblog-ib2208.blogspot.my/2009/03/international-staffing-decision.html.
Marc Jarrett. (2013 ). Expanding into Germany. Available: http://www.ukbusinessforums.co.uk/threads/expanding-into-germany.299174/.
Sandra Maria Correia, Eduardo Moraes. (2016). The online market and the consumer in the tourism activity.Available: https://repositorio.iscte iul.pt/bitstream/10071/12858/1/An_empiric_analysis_of_the_online_market_for_the_adventure_2016_2ecd37.pdf.
Sylvia Schroll –Machl. (2016) Doing Business With Germans. 6th Edition, Publisher Gottingen
The core text (Brewster et al, 2011), in particular chapters 2, 3 and 14