Farand (2017) reports that youth unemployment (18-24 year olds) in Greece now stands at over 47% with overall unemployment at 20%. Poverty, as a result, has increased and many young Greeks are looking to move abroad for work. For those who remain, the Government has limited how much money they can withdraw from their bank accounts each month whilst even state pensions have been cut as the Government struggles to repay its debts to the EU and ‘balance the books’. However, there are signs that the EU is going to offer debt relief to Greece given how it has controlled its deficit; it still remains a popular tourist area for Europeans and the migrant crisis has created jobs for a number of professions.
You are a strategist for a hotel group which operates within Europe but not the Greek Isles. You do have an intended expansion strategy to continue European expansion within tourist areas. An opportunity has arisen. A small hotel chain has approached the organisation and asked if you would be interested in making an offer for the chain of hotels which has, on average, 2 4* hotels on each of the most popular Greek Islands (14 in total). The owner wishes to retire. Due diligence on the business has revealed some cash flow problems with staff wanting to be paid in cash rather than through their bank accounts due to the restrictions which they face with withdrawing their wages and issues with reliability as local suppliers are not being able to provide items such as food and cleaning materials when required. Whilst your organisation prefers to use local suppliers, you do have in place alternative suppliers within other European areas and have efficient internal processes to support the management of hotels.
You should prepare a formal business report for the senior management team which considers this opportunity giving specific consideration to the following:
Question 1:
Distinguish between intended, emergent and realised strategies. Utilising appropriate analysis tools, undertake an external and internal environmental analysis on the organisation being sold (reasonable assumptions can be made). What opportunities and threats can you identify for your organisation should such a purchase go ahead? Your organisation has placed great value in the past on customer intimacy (building and creating value for customers – raising their expectations and delivering on these – see course notes). Considering the internal environment of the hotel chain which is for sale, what issues do you foresee? Could these be overcome?
What strengths would you need to have to overcome identified weaknesses?
You will need to justify your use of tools and techniques chosen to undertake this.
Question 2:
Taking a resource based and market based view towards strategy, what would you be considering when determining whether or not the purchase of the hotel chain would be a good idea? Would any of Mintzberg and Lampel’s Ten Schools of Strategy Formulation offer any further considerations?
Question 3:
Taking into consideration your findings, would you recommend the purchase of the hotel chain? Your response should be justified with regards to your environmental analysis and highlight any risks and weaknesses identified.
Should the strategy be given approval, this would be an example of top down strategy making. What are its limitations in practice and what alternative processes to strategy making is available for multi-national organisations?
Youth unemployment in Greece, acting as strategist for European Hotel group create a formal report for the senior management team considering questions 1, 2 and 3 in the assignment brief.
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