Business Performance

Topics: Strategic management, Management, Balanced scorecard Pages: 17 (4099 words) Published: May 6, 2011
1. Introduction
Although Vietnam is affected by global economic crisis, foreign investors remain positive about its long-term prospects. With the support of infrastructure development projects, construction sectors and other manufacturing investments, hospitality industry records a steady acceleration in growth. Opened in 2000 and managed by Marriott Group, New World Hotel Saigon (NWHS), the largest international five-star hotel in Ho Chi Minh City, is well-known with its excellent performance and financial result. However, financial performance of NWHS decreased significantly in the last two years due to its unsuitable business strategy in difficult economic period.

As a Financial Controller, the author is responsible for reviewing current data and figures, analysing the neglect areas and participating in building another relevant business strategy. The author used the business models such as “Resource-based view” (Grant, 2002), the Mac Kinsey 7S model (Peters and Waterman, 1980s), “Value Chain” (Porter, 1985) and “Balance Scores Card” (Kaplan and Norton, 1996) to measure and assess the advantages, disadvantages and key points of NWHS that based on them management can prepare an effective business strategy.

2. Literature review
2.1. The Resource-Based View (Barney, J., 1991)
It is defined by Barney, J. (1991) that resources can be strategic assets and based on them, a business firm can earn abnormal return. Barney (1991) also developed a framework called VIRO (value, inimitability, rare, organisation) to assess which kinds of resources can become “sustainable competitive advantage”. They should create value to satisfy customers, be rare to compare to competitors, be inimitable and well-organisation. Resources can be classified into three basic types such as “tangible assets, intangible assets and human resources” (Grant, R. 2002). Tangible assets are land, building, machines or equipments. Intangible assets are reputation, goodwill, branch development or culture of organization (Chong, C.W. et al, 2000). Human resource is skill, experience, knowledge and know-how. Together with Resources, Capabilities are also the basis of advantage competitive. Capabilities will grow stronger and hard for competitors to imitate. They make the business firm become differently from others, however, it should not be complicated or complex to manage or control. For this reason, building an organisational capability becomes the priority and top mission of most of the firms (Ulrich, D. and Lake, D, 1990).

2.2. The McKinsey 7S Framework (Peters, T. and Waterman, R., 1980s)
Peters, T. and Waterman, R. explored the McKinsey 7S framework in early 1980s that consists of 7 variables categorised into “hard” and “soft” elements, all begins with “S”. “Hard” elements are related to Strategy, Structure and Systems and easily to comprehend. “Soft” elements refer to manpower (Share Values, Skills, Staff and Style) and hardly feasible and difficult to change. The Mc Kinsey 7S framework is shown as Figure 1.

Source: Peters, T. and Waterman, R. (1983)
An organisation has excellent performance when its 7 elements fit together and have a harmony development (Pascale, R. and Athos, A., 1981). The operation will be failed if only some components of this framework change, because 7 components have reciprocal impacts (Boyle, S., 2007). .

The weakness of this model is the external environment is not mentioned, but in the other hand, it is easy to remember and understand. Hence, the McKinsey 7S model is widely used by hundreds of organizations for analytical purposes.

2.3. Porter’s Value Chain
Porter, M.E. (1985) developed Value Chain that is a tool to measure the adding values of a product or service in business activities. Earning profit of owners or shareholders will increase accordingly.

Figure 2: The value chain model
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