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Ritz Carelton - Change Management

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RSM 312 (Case Analysis for Strategic Management) - Case Presentation @ Rotman Commerce

RSM 312 (Case Analysis for Strategic Management) - Case Presentation @ Rotman Commerce

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  • 1. Extra cost per week of training need only be covered by a 0.25% increase in
  • Internal buy in to ensure brand perception is not changed from within the companyHigher occupancy rates, more stress on employeesBig partner, involve them in the process. To prevent them to work with 4 seasons

Ritz Carelton - Change Management Ritz Carelton - Change Management Presentation Transcript

  • Are Seven Days Enough?
    Daniel Rodic, David Hao, Jacky Lei
    November 1, 2010
  • Agenda
    1
    Key Questions & Recommendation
    2
    Supporting Analysis
    3
    Potential Risks & Mitigation Plans
    4
    Next Steps & Key Takeaways
    2
    Ritz-Carlton Hotel Company
  • Ritz-Carlton Hotel Company
    3
    Key Questions & Recommendation
  • Ritz Carlton is facing a tough decision regarding its typical operating procedures in lieu of Collin’s requests.
    Ritz-Carlton Hotel Company
    4
    Complication
    Situation
    Brian Collins from Millennium Partners is worried that 7 days is not enough time to properly train the Ritz-Carlton staff, and wants to open closer to 80% occupancy.
    The Ritz-Carlton is in the process of opening a new hotel in Washington D.C. as part of a multi-use facility in partnership with Millennium Partners.
    Should Ritz-Carlton heed Brian Collin’s requests?
    What are the impacts of altering the “Seven Day Countdown”?
    What are the impacts of opening closer to 80% occupancy?
    How does this affect your relationship w/ Millennium Partners?
    What is Four Seasons doing that could impact your decision?
    • Financial, Brand, Morale?
    • What type of extra training is needed to achieve this goal?
    • Positive / Negative effects?
    • Does this decision affect the success of Four Seasons?
    1
    2
    3
    4
    Cancelling the contract is not a feasible option.
    Hotel opens in
    January 2001
    Ritz cannot observe Four Season`s actions.
  • Ritz Carlton should extend the countdown and increase initial occupancy rates.
    Ritz-Carlton Hotel Company
    5
    Should Ritz-Carlton heed Brian Collin’s requests?
    What are the impacts of altering the “Seven Day Countdown”?
    What are the impacts of opening closer to 80% occupancy?
    How does this affect our relationship w/ Millennium Partners?
    What is Four Seasons doing that could impact our decision?
    Extend countdown and increase initial occupancy rate.
    Extend countdown but maintain typical occupancy rates.
    Reject Brian Collin’s requests.
    Extend countdown and increase initial occupancy rate.
  • Accommodating Collin’s request best aligns with Ritz Carlton’s overall key success drivers.
    Ritz-Carlton Hotel Company
    6
    Alignment
    with Criteria
    High
    Medium
    Low
  • Ritz-Carlton Hotel Company
    7
    Supporting Analysis
  • Accepting Collin’s request yields attractive benefits.
    Opening at a higher occupancy rate provides earlier cash flows for reinvestment in other projects.
    Less lag time between offer and start of work term reduces relationship building costs.
    Provides confidence for future projects with current and future partners.
    Ritz-Carlton Hotel Company
    8
    Reduced
    Post-Hire Costs
    Earlier Cash Flows
    SERVICE
    CULTURE
    Long Term Enhancement of Partnership
    Professional Service is at the core of Ritz Carlton
  • Increasing overall occupancy each month leads to large increases in year end cash.
    Ritz-Carlton Hotel Company
    9
    Extra Week of Training
    (+$75,000)
    +0.25% in Total Occupancy
    Figure 1: Projected Ending Cash Balance
  • Ritz-Carlton Hotel Company
    10
    Potential Risks & Mitigation Plans
  • Ritz Carlton is facing three key risks going forward.
    Ritz-Carlton Hotel Company
    11
    Brand
    Risk
    Vet the new training process with all levels of management at Ritz Carlton to ensure it aligns with the company’s core values.
    Quality
    Risk
    Extended training will ease new employees into their jobs, and better prepare them to handle an increased opening occupancy rate.
    Partnership Risk
    Involve Millennium Partners in the creation of the new training program to generate buy in, and build confidence for future hotel opening.
  • Ritz-Carlton Hotel Company
    12
    Next Steps & Key Takeaways
  • Ritz Carlton needs to act now to meet Collin’s expectations.
    Ritz-Carlton Hotel Company
    13
    Continue other preparatory activities for the January 2001 Opening.
    High
    Contact new hires to advise them of new training timeline.
    Launch revised countdown training program.
    Inform Ritz Mgmt of Change in Training
    1 Week
    Priority
    Engage MP in training development.
    Vet revised training by upper Ritz management.
    Medium
    Begin revising
    countdown schedule
    1 Month
    Determine length of revised countdown plan.
    Low
    Time from Today
    3 Month
  • Ritz-Carlton Hotel Company
    14
    “As soon as two people come together, conflict will arise. It’s not the fact that we have conflict – it’s what we do with it. We all have the same dream of excellence; we all have the same goal: to be successful.”
    - Howard Schulze
  • Appendix
  • Projected Cash Flows (1)
    Ritz-Carlton Hotel Company
    16
  • Projected Cash Flows (2)
    Ritz-Carlton Hotel Company
    17