Assessment Of The Organizational Structure And Environment Of Ritz-Carlton Hotel Company Bahrain

Organizational structure of Ritz-Carlton Hotel Company

The Ritz–Carlton Hotel Company is an American organization which operates the globally renowned luxury hotel chain popularly known as Ritz-Cariton. The organization owns 91 resorts as well as luxury hotels in more than 30 developed and developing countries and has a huge work force of about 40000 employees ( ritzcarlton.com 2018). The organization has evidenced a gradual increase in revenue due to commendable leadership provided by the managers and executives. Considering the fact that the western hostility industry is highly saturated, the management of the organization had chosen Bahrain as a target market which has the potential to enhance the revenue of the company. Due to its high quality of products as well as services, Ritz-Cartion is one of the most popular hotels across Bahrain. Like any other organization, the leadership of the executives plays a major role behind the success of the company. The company is best known for its highly luxurious residences (Alsabbagh and Ahmad, 2013). Since direct interaction and services are provided by the employees of the hotel, the management of Ritz-Carlton considers the staffs to be most vital part of the organization. With the emergence of globalization, more international companies have established their branches in Bahrain which in turn has impose an adverse impact on the monopoly of the company. In this report the current external as well as internal environment of the company has been analyzed and evaluated with the help of several assessment tools. This analysis will be done to access the loopholes of the organization that needs to be eradicated. In order to suggest the required changes, recommendations along with a revised organizational structure will be provided in this report.

The current organizational structure of the Ritz–Cariton Hotel Company is as follows:

Figure 1: Organization Structure of Ritz-Cariton Hotel

Source: (created by author)

The term external environment can be defined as the outside influences that impose an impact on the operation of a business. Assessing the external environment is highly crucial for an organization since it impose immense impact on the revenue of the company (Hensens 2015).  In order to keep up with the flow of operation, the management of Ritz–Cariton Hotel needs to keep accordance to external environment of the organization. The internal environment of the Ritz-Cariton Hotel is composed of elements within the company like current management, employees and corporate culture which defines the behavior of the employees. In order to access both the external and internal environments of the Ritz-Cariton Hotel the following tools have been used.

Analysis of the external environment

PEST analysis is a tool that is designed to assess the external environment of an organization. The 6 external factors that are assessed through PESTLE analysis has the potential to influence the marketing and relationships that an organization has worked hard to develop. In order to assess the external factors that have imposed impact on the Ritz-Cariton Hotel, PESTLE Analysis of the Ritz-Cariton Hotel, Bahrain has been conducted below.

.Political

• The political system of Bahrain is Constitutional monarchy headed by the king.
• The political condition of the country is unstable and violation of human right and press restriction is frequent. Political instability does impose negative impact on the hospitability industry of Bahrain (DOBAI 2016).  
• Bahrain has small but equipped deference which is known as the Bahrain deference force. Moreover, the corruption rate is much lower in Bahrain compared to any other developed country. Since this factors ensures security of the consumers from unwanted terrorist attacks, it impose positive impact on the hotel industry of Bahrain.
• The government of Bahrain facilitates the hospitality industry in order to enhance the revenue of the country.

Economic

• The economy of Bahrain is oil dependent. Currently, the government is giving priority to other industries to make Bahrain oil-dependent.
• Considering the fact that in the year 2017, the total revenue obtained from the hospitality industry is 16 percent more than what was expected, the Bahrainian government is providing more opportunities for the development of the Bahrainian hospitality industry (Zalengera et al. 2014).
• The GDP of Bahrain has got reduced by 2.1 percent due to global financial turmoil. This has imposed a negative impact on the hospitality industry since it has reduced the number of consumers of the same.

Socio-Cultural

• The country is governed by Islamic laws and regulation. The society of Bahrain lacks cultural diversity and there prevails a cultural incompetence in the society. Since hotel industry involves visitors from all over the world, lack off cultural competence in the citizen imposes negative impact on the hospitality industry.
• The workforce of Bahrain is growing. However, there prevails lack o cultural competence amongst the employees of the hospitality industry (Bharwani and Mathews 2012).
• The hospitality industry of Bahrain suffers substantial decline in business during Ramadan.

Technological

• Bahrain is a technologically advanced country. The well connected transportation network of Bahrain enhances the effectiveness of both inbound and outbound logistic of the hotel industry.
• The 24*7 access to the internet and round the clock electricity helps hotels in Bahrain to ameliorate the ease of doing business (Aithal 2017).

Legal

• Bahrain does not have federal system. The Egyptian law and French law influence the legal system of Bahrain.
• Bahrain has a national constitution and the laws are codified.
• Certain business activities are reserved even for Bahraini nationals and companies.
• The Commercial Companies Law allows incorporation of 100% foreign capital for foreign companies (Najjar 2012).

Environmental

• Scarcity of fresh water, desertification, and pollution from oil production are the major environmental problems in Bahrain.
• The industrial development and population growth in Bahrain is reducing the agricultural land and lowered the water level (Coccia 2014).

SWOT analysis is considered to be a highly useful tool that helps the management of an organization to assess the internal environment of an organization by detecting it s strengths and weaknesses and identifying both opportunities and threat faced y the same. In the following paragraph, SWOT analysis of the Ritz-Carlton hotel has been performed.  

Strengths

• High brand equity: Ritz Carlton is one of the most renewed luxurious hotel chains across the world.
• Employee empowerment:  The company has major training operation in its Ritz –Carlton learning Institute along with Ritz-Carlton Leadership center. In both the institutes more than 50,000 executives from different branches of the company across the world are trained in the Ritz-Carlton principle of services (Idris and Abdul Wahab 2015).
• Consumer good will: Well trained employees provide high quality of services and products to the consumers. Moreover, in depth sharing of data base of the consumers for creating an effective consumer-employee relationship acts as a competitive advantage for the mentioned organization.

Weaknesses

• Low competitive competence of the residence of Bahrain can be considered as a major weakness of Ritz-Carlton Bahrain.
• The brand name of the company comes with the perception of being expensive and thus is avoided by the middle class and upper middle class population of Bahrain.
• The current economic turmoil of Bahrain imposes a negative impact on the spending of the company.
• The declining bottom line and high employee turnover of the mentioned hotel can be considered as another major weakness of the country.
• The incident of suicide bombing that took place in the year 2009, 17^thJuly has raised a doubt about the security provided by the management in the consumer’s mind (Seal 2016).  

Opportunities

• The company can enhance its consumer base through increased cooperate tie ups and through special packages
• Considering the fact that the government of Bahrain is working upon the expansion of global tourism, the market of the mentioned will get enhanced.
• Opening  new hotels in developing countries in the eastern region and targeting asian market  in order to gain competitive advantages.
• The management can improve as well as promote the security arrangement of the hotel in order to regain its potential consumers.
• In order to enhance the good will of the consumers, the management can undertake crucial social responsibilities (Fazli and Farooq 2018).
• For promotional purpose, Ritz-Carlton, Bahrain can sponsor popular events .

Threats

• Increasing costs for operations in Bahrain has indirectly affected the rate of the service provided by the Ritz-Carlton Hotel
• Another major threat of the mentioned hotel is the emergence of new luxury hotels like, Hyatt, Starwood hotel and resort and Hilton in Bahrain. Intense completion from global as well as local we recognized hotels can impose an adverse impact on the revenue of the country (DOBAI 2016).
• The declining tourism industry due to terrorist activities and natural disaster can be considered as another threat to the hotel chain.
• The rescission that took place across the world may decrease the  number of international visitors in Bahrain. This will adversely affect the Ritz-Carlton hotel, Bahrain.
• The new innovate ideas of the new entrances are attracting people.
• Security threat due to recent terrorism in Bahrain is another major threat faced by the mentioned company.

McKinsey’s 7S model is referred to a assessment tool that analyzes the organizational design of an institution by analyzing the 7 key internal elements that includes strategy, structure, system, shared values, style, staff and skills of that organization (Kohtamäki et al. 2012).  This tool is used to identify if all the seven factors are effectively aligned so that the organization can achieve success. In the following paragraph, 7S analysis of the Ritz-Carton Company has been conducted

1. Strategy:

• Establishing strategic alliance
• The Hr department of Ritz-Carlton Hotel, Bahrain is implementing strategy to educate its employees about the negative impact of cultural incompetence.
• The company is focusing on international marketing as well as re-branding of hotels (Mishrif and Al Balushi 2017).

1. Structure:

• The company is currently following a top to bottom, vertical organizational structure.

1. System:

• Lodging management system: this system includes various modules including front office, guest history, group sales, travel agencies, accounts receivable and yield management.
• Easy reservation input
• Maintaining waiting lists
• The company provides optimal return on rooms along with maximum room occupancy and flexible room concession (Fazli and Farooq 2018).
• The company provides pre-printed registration cards along with confirmation letters.

1. Shared  values:

• The aim of the company is to gain the top position in the hotel industry
• The company is cautious about its role in the in the community. The management is involved in supporting various social requirements and ensuring employment with the local community of Bahrain.

1. Skills:

• Ritz-Carlton, Bahrain, is committed to ensure the satisfaction of the consumers.
• The management provides special training to the executives for critical, analytical as well as problem solving skills that have been developed through researching, evaluating and presenting data and arguments.
• The management of the hotel have recruited employees with it skills in order to collect, organize and present information in spreadsheet or database.
• However, lack of negation and team working spirit has been observed in the team.

1. Style:

• The management of the organization follows too bottom up style.
• Major decision about recruitment and other policies and procedures are taken in top down fashion while decision about pricing and consumers arew taken in the bottom up fashion.

1. Staff:

• The company provides effective training to its employees.
• Two major training institutes have been constructed to train all the employees under the same roof (Mishrif and Al Balushi 2017)
• Staffs are trained to develop the capability to handle stress, develop punctuality and knowledge of foreign languages and pay attention to details.

In hospitality industry, the balanced scorecard (BSC) is a strategic planning and management tool that is utilized by many organizations to structure and manage their accomplishment, aligned with the everyday work that are executed with appropriate strategy by Prioritizing projects, products, and services, Measure to monitor progress towards strategic targets. More than 50% of the major companies in the US, Europe, Middle East, Africa and Asia are using the BSC (Rasula, Vuksic and  2012). For Ritz–Carlton Hotel Company, BSC tool considers the mission, vision and core values of the organization; strategic focus areas, operational elements and objectives; key performance indicators or KPIs to measure the strategic performance of the company aiming the targets and initiatives or actions. The BSC tool assesses Ritz–Carlton Hotel Company from four perspectives as described below:

Financial: Though the BSC of Ritz–Carlton Hotel Company, the Revenue per guest and revenue per available room can be found in financial metrics. Other financial measures of Ritz–Carlton Hotel Company including earnings per share, net profit and stock price are listed in the financial category of BSC.

Customer: For Ritz–Carlton Hotel Company the metrics in the customer category focuses on the trends and expectations of the target market that also includes the Survey results, customer retention rates, complaints or other customer-related data.

Analysis of the internal environment

Internal Business Process: Maintenance costs, accidents and quality metrics of Ritz–Carlton Hotel Company can be found in the internal business process category within the balanced scorecard. As an example if rooms are in disorder and serious maintenance is needed, it alarms the management with required capital expenditures (Seal 2016).

Learning and Growth: The BSC of Ritz–Carlton Hotel Company also includes the Hours of training, skill levels achieved, employee turnover and learning growth metrics. The personnel turnover is an important sign of development of employees that also influences the customer experiences.

Ritz–Carlton Hotel Company has applied the Balanced Scorecard in the chain of five star hotels. Ritz–Carlton Hotel Company is a good example of utilizing BSC in Bahrain and was implemented in 2002 due to the changes in demand and expectations of customers and the increasing competition in the Hospitality industry. Within two years the implementation of BSC helped them to increase their revenues per room. Ritz–Carlton Hotel Company used BSC to focus on both short-term and long-term drivers, brand equity while rewarding teamwork, reviewing performance, sharing best practices, promoting innovative processes.

After the implementation of BSC in 2012 the strategic target of Ritz–Carlton Hotel Company were to: 

• Documented and measure a 15% annual compounded annual growth in total revenues
• Achieving $ 300 million revenues within the year 2003
• Accomplishing 20% increase in guest scores successfully
• Go beyond brand average surrender and Revenue per Room (RevPAR) levels
• Achieve less than 60% Hourly employee turnover annually
• Achieve less than 20%  Management turnover annually
• An unleveraged Cash on cost target of 15% by delivering high return on investment

After 2013, Ritz–Carlton Hotel Company had achieved:

Financial	Amount of Return on Investment (ROI) (7 out of 10 points)
Customer	Percentage of  Customer retention (6.8 out of 10 points)
Internal processes	Percentage of employee recruitment and growth rate (6.7 out of 10 points)
Learning & growth	Percentage Employee satisfaction (6.1 out of 10 points)

Business Priority Matrix is a very simple assessment tools that allow a business organization to prioritize their operation as per the importance and urgency. This prioritization helps the company to develop action plan with effective scheduling and planning. In Hotel industry the business priority matrix is used in many purpose considering the activities that regulate the brand equity, consumer satisfaction, enhancement of competency, change management and other internal and external operation. Ritz–Carlton Hotel Company uses the business priority matrix mainly in their regular business operation that includes the consumer satisfaction management, procurement, maintenance, supply chain management and in other internal operations (Köseoglu et al. 2013). The following Table describes the key activities of Ritz–Carlton Hotel Company by considering their respective position in Business Priority Matrix:

	High Urgency	Low Urgency
High Importance	Critical Activities	Important Goals
· Customer complain · Quality Issue · Failure or needs of repairing	· Relationship building with new customer · Improving Maintenance System · Revenue Enhancement
Low Important	Interruptions	Distractions
· Emergency handling · CSR improvement · Employee satisfaction	· Management and system Procurement · Business Compliances

Table 1: Business Priority Matrix for Bahrain Ritz–Carlton Hotel Company

Source: (created by author)

To operate in the hospitality industry of Bahrain Ritz–Carlton Hotel Company developed a ‘Sales Pros Action’ extension as a part of their Business Priority Matrix that helps the management to plan their sales and marketing activities with appropriate time management (Watson 2013). At the same time, Ritz–Carlton Hotel Company uses this tools for their feedback collection and market monitoring operation, where they need to prioritize the complain resolving activities as per their respective value for two mentioned parameters namely importance and urgency. After changing the marketing and promotion strategy in 2010 the company also declared that they needed to change their internal operation in considerable amount. The Business Priority Matrix is used for more than 50% of their change management procedures (Coker 2014). Currently the CSR involvement of Ritz–Carlton Hotel Company has been shifted to the Interruption section of the Priority Matrix due to its urgency in the hospitality industry in Bahrain and its low importance for global brand equity (Brotherton 2012). As per the annual report and progress plan in upcoming year Ritz–Carlton Hotel Company is going to implement this tool in their training, development and other HR procedures.

Assessment tools used for analysis

After the intervention of Web 2.0 the utilization social media and other advance networking system as a part of the feedback collection has been increased (Eason 2014). Online questionnaires is very common format of taking feedback from a stipulated amount of respondents through the survey procedures comprising either open ended or close ended MCQ questions or both. Ritz–Carlton Hotel Company uses online assessment questionnaires for both internal and external operation (Bowie et al. 2016). In internal operation the online assessment questionnaires are used to collect feedback from the existing and new employees as a part of monitoring and procurement process. On the other hand, the online assessment questionnaires are also used for the customer feedback collection process, market analysis, brand equity management and other external operation of Ritz–Carlton Hotel Company. Ritz–Carlton Hotel Company uses the Online Assessment questionnaires through both social media and non-social media platform as a major tool of conducting survey for both market penetration and service diversification.

Ritz–Carlton Hotel Company uses the survey report from online questionnaires and feedbacks to develop a quantitative analytical document which is often developed in market research procedure. Due to the fast changing economy of Bahrain and the increasing competition in hospitality industry, Ritz–Carlton Hotel Company uses the online based survey or assessment questionnaires to keep themselves updated about demand of the potential market segment and the condition of existing market with future possibilities (Wang 2014).  In change management and procurement procedure Ritz–Carlton Hotel Company utilizes the online assessment questionnaires tool within their official employee forum to monitor and gauging the potentiality and acceptance level.

By utilizing the discussed strategic tools in their business operation Ritz–Carlton Hotel Company has evidenced a gradual increase in revenue due to commendable leadership provided by the managers and executives. Due to the high quality of products as well as services, Ritz-Cartion is one of the most popular hotels across Bahrain. However, to avoid low competitive competence of the residence of Bahrain, current economic turmoil, high employee turnover some organization strategies and structures should be changed. These recommendations are described below:

The existing organization structure, which worked for  Ritz–Carlton Hotel Company in their long run across the national boundaries is making some constrains in information flow and controlling system. Although vertical or hierarchical structure is best for any organization in hospitality industry Ritz–Carlton Hotel Company has to change their organizational structure in order to increase their time efficiency and accuracy (Boella and Goss-Turner 2013). The suggested organizational structure is shown below:

Recommendations and changes to the organizational structure

Figure 2: Suggested Organization Structure

Source: (created by author)

The altered organizational structure does not change the core resource allocation and distribution pattern of the organization. However, the new organizational structure changes the cardinality value of some superior positions. As per the presentation the executive manager has longest chain of subordinate designations. The reason behind this formulation is to increase the operational accuracy and efficiency of room management over other parts of the service providing. Apart from that, the new proposed chart also improvises the innovation and tactical strategy within the work flow diagram of Ritz–Carlton Hotel Company in Bahrain. Despite of that in new organizational structure the Human Resource Department has been strengthen by incorporating multithreaded monitoring or supervising procedure (Okumus 2013). These structure would help the organization to improve their employee retention level while minimizing their annual workforce turnover. Apart from that another valuable designation in incorporated named Director of E-commerce in the sales and marketing department and under the Director of Sales and Marketing. This additional director would direct the ecommerce activities related to the online server and social media platform.

The existing targets and objectives of Ritz–Carlton Hotel Company is:

• Enhance consumer base through increased cooperate tie ups and special packages
• Opening  new hotels in other neighbor developing countries
• Improvement of Management
• Enhance the customer satisfaction

The existing business aim and objectives, which worked for Ritz–Carlton Hotel Company in their business operation of across the national boundaries is making some constrains in information flow and controlling system (Kandampully, Zhang and Bilgihan 2015). In the existing aim and objectives of the Ritz–Carlton Hotel Company’s business operation the intervention of the CSR activities is missing. Therefore, in updated business plan the aims and objectives should be aligned with the CSR activities and strategic promotional activities. The suggested aims and objectives for Ritz–Carlton Hotel Company are mentioned below:

• Globalization of specialize offers implemented in Bahrain
• Promotional activities by sponsoring popular event
• Enhancing the security arrangement

These three points would act as the major game changer for Ritz–Carlton Hotel Company in the hospitality industry in Bahrain. The globalization of the special services planned specifically for the market segment of Bahrain would allow the company to implement their innovative ideas (Alon, Ni and Wang 2012). Apart from that, the company lacks their passive promotional activities such as sponsoring event, social care activities and others. These activities can improve the brand value and CSR strategy simultaneously. GDA International Downstream Conference & Exhibition, Bahrain Housing Expo (BHEXPO), Bahrain International Property Exhibition (Bipex), Gulf Executive Leadership Support Forum (GLS Forum) are some of the major examples of international events that are organized in the Bahrain where Ritz–Carlton Hotel Company can improvise their sponsorship as a strategic activities for passive promotion and marketing (Leonidou et al. 2013). After the economic, political and social turmoil of last few years the tourism businesses are suffering from declined consumer loyalty for safety and security issues. Ritz–Carlton Hotel Company should focus on their security improvement in order to retain the consumer loyalty and increase the competency.

Conclusion

In internal and external business operation and controlling Ritz–Carlton Hotel Company uses the following tools and strategies:

• PESTLE analysis tool
• SWOT analysis tool
• Balance Score Card or BSC
• Business Priority Matrix or BPM
• Online Assessment Questionnaires

The existing applied tools have helped to gauge the growth of the company successfully. Along with these existing strategic tools for business operations Ritz–Carlton Hotel Company can also incorporate new tools such as:

• Gallup’s Employee Engagement Metrics
• Line Up Tool
• Gallup’s Customers Engagement Metrics

Enabling the Gallup’s Employee Engagement Metrics in their Human Resource and performance management operation would allow Ritz–Carlton Hotel Company to engage all the employees in their team work, change management and in procurement activities. This matrix allows the management to satisfy the expectations of the employee that increases the performance of the overall workforce (Peters 2012). It utilizes the feedback collection, performance monitoring, recognizing and rewording management and other operation.

Ritz–Carlton Hotel Company should also utilize the Line up tool for betterment of their information integrity and forecasting efficiency. Through this tool everyone in the organization gets informed about the current situation, which will taken place or he/she is about to face on a specific day. The practice of Line Up was taken from culinary division in hospitality industry as an effort benchmark for effective corporate communication strategies. The Line Up procedure involves Repetition of values, which is the core beliefs to be discussed everyday and should remind everyone; Common Language that helps everyone to interact easily with terms like “credo” “a fond farewell”; Modeling by leaders, that refers the daily presence of all leaders and the commitment of resources to free up staff time for daily participation (Grissemann Plank and Brunner-Sperdin 2013).

For Ritz Carlton company customer satisfaction is always the pint of high priority. The Gallup Customer engagement Metrics allows customer to interact with the business operation as a source of suggestion and advices. It contains eleven questions including how satisfied are you Ritz Carlton? How likely are you to choose Ritz Carlton? Does Ritz Carlton always treat me with respect? Ritz Carlton always delivers that they promise and other survey questions. These customer engagement assessments surveys, allows the management of the Ritz Carlton Company of Bahrain to monitor the consumer trends and demand from the specific hotels.

Ritz–Carlton Hotel Company should improve their change management operation to handle the situational alteration as per the suggested recovery model. Implementing new work process in the existing workforce usually creates a strong opposing force also known as resistance against changes. The purpose of the change management is managing the workforce strategically that can increase the acceptability within the employees while increasing the driving force for the change over the resistance force (Díaz and Koutra 2013). Here Ritz–Carlton Hotel Company can implement force field analysis to demonstrate as well as understand the existing internal situation and obligations. The leadership strategy and employee plays a significant role in the change management procedure. On the other hand, the management strategy has to be aligned with the leadership strategy in order to monitor and control the source of resistance against the change. In the change operation the major three phases are defreeze, alteration and refreeze. In Defreeze condition the leaders has to convey the purpose of the change and the potential benefit of the new process that increases the acceptance of the employees. After alteration in the refreeze phase, the monitoring is the most significant task that is to be done by the management and the leaders (Rahimi and Kozak 2017).

Conclusion: 

From the above discussion it can be said that Ritz–Carlton Hotel Company is an American organization which operates the globally renowned luxury hotel chain popularly known as Ritz-Cariton. The organization has evidenced a gradual increase in revenue due to commendable leadership provided by the managers and executives. Considering the fact that the western hostility industry is highly saturated, the management of the organization had chosen Bahrain as a target market which has the potential to enhance the revenue of the company. The management of Ritz–Cariton Hotel needs to keep accordance to external environment of the organization. In order to assess the external factors that have imposed impact on the Ritz-Cariton Hotel, PESTLE Analysis of the Ritz-Cariton Hotel, Bahrain has been conducted. The SWOT analysis of the Ritz-Carlton hotel has been performed. Business Priority Matrix is a very simple assessment tools that allow a business organization to prioritize their operation as per the importance and urgency. This prioritization helps the company to develop action plan with effective scheduling and planning.

Due to the high quality of products as well as services, Ritz-Cartion is one of the most popular hotels across Bahrain. In order to avoid low competitive competence of the residence of Bahrain, current economic turmoil, high employee turnover some organization strategies and structures should be changed accordingly. The leadership strategy and employee plays a significant role in the change management procedure. Along with these existing strategic tools for business operations Ritz–Carlton Hotel Company can also incorporate new tools. However, the altered organizational structure does not change the core resource allocation and distribution pattern of the organization. Moreover, Ritz–Carlton Hotel Company should improve their change management operation to handle the situational alteration as per the suggested recovery model.

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