Change Management- Shangri-La 2000

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  • Topic: Strategy, Hotel, Shangri-La Hotels
  • Pages : 13 (3530 words )
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  • Published : December 16, 2012
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Change Management- Shangri-La 2000

Introduction

The paper reviews the changing event of organizational culture of Shangri-La Asia Limited (hereinafter referred to as “Shangri-La”) held in the 1990s. In spite of enjoying some appreciable profits and rapid development of the scale of the company in the early 1990s, their management concerned the urgency of change in organization culture in order to enhance customer loyalty through creating a common goal and a set of common values within the organization. In this paper, Kotter’s change model is used in explaining the critical change factors in Shangri-La. The case study undertaken in Shangri-La, Kowloon (hereinafter referred to as “KSL”) is used as an example to help us to illustrate the issues that the management of Shangri-La encountered. We will also discuss the possible handling approaches of those issues.

Background

Shangri-La Hotels and Resorts have been established in Singapore by Malaysian-Chinese tycoon Robert Kuok in 1971. In the early stage of the business, the management of Shangri-La Hotels was contracted with Western International Limited including Shangri-La Kowloon, which is the second Shangri-La hotel established in 1981.

Shangri-La had foreseen the possibility of managing their own hotels and later formed its own management company in 1983, Shangri-La International Management (SLIM). The management of Shangri-La hotels subsequently transited to SLIM from Westin. In the case of Shangri-La Kowloon, SLIM took over the management from Westin and the transition was completed in 1989.

In the early 1990s, the economics of Asia was booming and Shangri-La experienced rapid expansion in Asia through raising funds from establishing publicly listed companies. Shangri-La Asia Ltd. (SLA) was formed and publicly listed in Hong Kong in 1993 and later merged with SLIM. Soon after, the new Managing Director of SLA came abroad and she observed that the management of Shangri-La was lack of common values and goals among hotels and each hotel had developed its own management processes, service standards and style. She helped the top management recognized this was not beneficial to the on-going expansion of the hotel chain and there was an urgency for change.

Shangri-La management navigated a course that would preserve brand integrity while modifying the management approach in order to lead Shangri-La uniquely positioning on distinctive Asian standards of service and hospitality and becoming “the dominant hotel company on its market by the year 2000”. The “Shangri-La 2000” strategic plan was developed to aid the change processes within the organization.

The “Shangri-La 2000” was an ambitious strategic plan aimed at increasing the long-term competitiveness of the company was designed by top management. The plan consisted of the development and communication of core values, guiding principles, corporate vision, business processes, performance measures and communication kit. The launching was started in 1996 of “Shangri-La 2000” was in a top-down, “cascading approach”. The plan was introduced to Shangri-La Kowloon in mid-1996 and the implementation was completed in March 1999.

Kotter’s change model and “Shangri-La 2000”

We will use the Kotter’s 8 steps to evaluate whether Shangri-La used the same approach:

1) Create sense of urgency

Always need to create the need for a change. This will help the initial motivation to get things move. Step 1 is the most critical steps and requires significant time and energy to build the urgency.

“Asian hospitality from caring people” has long been the Shangri-La philosophy. However it’s very vague and each hotel has its own culture, style. It’s basically a very decentralized organization; it’s got no standards in management process and service standard. There was no common marketing strategy or centralized budgeting process. Even though the company is making profit and it is fine in the current...
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