Business plan: hotel "Laima"

 VILNIUS GEDIMINAS TECHNICAL UNIVERSITY Business management department Management homework Fulfilled by INu-3 group stududent A. Bolys Checked by Prof. F. S. Butkus 2006 Vilnius Introduction My analyzed organization is a quite small hotel called “LAIMA”, which is one of the popular hotels in Druskininkai and located in the neighborhood of the city. It is set in 900 square meters of land near the forest in neighborhood of Druskininkai with just a few minutes walk from the river. The major activity is to attract tourists, who come into a beautiful resort Druskininkai, with several activities: health improving, entertainment and cultural. Hotel works everyday through the year. Hotel “LAIMA” has sauna and indoor swimming and padding pool, also it can offer car yard and garage for those tourists who are traveling with they own cars. It has famous in the city bar, which is open all day every day throughout the year. On top of all that it can offer the kids outdoor play area – the 600 square meters grounds with a swing, arbour, etc. Hotel employs 11 full-time employees, who do the major job for the hotel to the clients (cook, dishwasher, bookkeeper, 3 barmen, 2 maids, technician, receptionist, director). Although organization does not have official design scheme, as I managed to find out, they work under simple and centralized mechanistic structure. Organization’s chart: Part 1 To realize the managerial process in that organization, I will try to follow the theories about functions of management, differences of supervision described by management textbook authors. Henri Fayol (1841-1925), the French engineer, is credited with identifying basic functions, what he called activities, of the managerial process. His theory was built on personal observation and experience which worked well in organizations. He has identified management as a combination of Forecasting and Planning, Organizing, Commanding, Coordinating and Controlling. Later, the majority of management theorists have sticken to four basic functions: Planning, Organizing, Leading (motivating) and controlling. “Planning can be defined as the process by which managers set objectives, assess the future, and develop courses of action to accomplish these objectives. All managers are involved in planning activities.”1 Planning can be distinguished into two parts: strategic and operational. “Strategic planing is done by top-level managers. Specific activities in this role include: developing long-range plans and priorities for one’s department, contributing to long-range plans for the total organization and helping to develop corporate policies. Operational plans relate to the day-by-day operation of the company or unit. Two such activities are: formulating operating budgets and developing work schedules for the unit supervised by the manager. Middle-level managers are heavily involved in operational planning; lower-level managers are involved to a lesser extent.”2 Organizing is “a mean of bringing together human beings and physical resources in a co-ordinated and controlled way to achieve a particular objective. Organizing involves such an activity as building the company structure, which is very important to work as efficiently as possible. The structure of an organization has a very strong influence on the way employees behave and on the problems of managing them. Many of the major problems arising in an organization: changes in technology, reduction in resources, introduction of new services, are addressed by changing the structure of the organization. This response is common to most organizations.”3 According to Peter Drucker “Good organization structure does not by itself produce good performance. But a poor organization structure makes good performance impossible, no matter how good the individual managers may be. To improve organization structure will therefore always improve performance.” “Leading is a managerial function of influencing others to achieve organizational objectives. It involves dozens of processes such as motivating, communicating, coaching, and showing subordinate’s how they can reach their goals. Leadership can be considered as the interpersonal aspect of management. Leadership is such an important part of management that management is sometimes defined as “accomplishing results through people.”4 “For example, the win-loss records of athletic teams often depend on the leadership skills of the coaches and key players”5 Controlling is defined as “continual analysis and measurement of actual operations against the established standards developed during the planning process”6 Concentrating on operations, “managers in all parts of a company are responsible for wise use of resources. Wise use includes working toward the correct objectives and achieving efficiency as these objectives are pursued. Because operations managers often direct the largest proportion of a company’s human and capital resources, they play a major role in controlling.”7 Type of controlling differs in many organizations. Where “customer reaction is more immediate and less predictable such systems demand more sensitive, personal control. The degree of customer contact affects system efficiency.”8 Supervision. “The objective of any organization should be to use all the skills and expertise of employees, wherever they are in the organization. Relationships between different levels in the organization structure are important. Power and authority may be centralized or decentralized. For Decentralization: • Delegation reduces senior management stress. • Motivation is increased. • Copes with uncertainty and complexity better. • Decisions closer to the service user. • Better control and performance measurement. For Centralization • Clear where decisions are made. • More control • More conformity to policies etc. • Creates a balanced organization. Resources allocated fairly. • Economical. Little duplication. • Allows employment of specialists “9 Part 2 Following organization design chart we can easily see that director is on the peak of organization structure. He is top-level manager. One of the most important activities of director in particular organization is as described by Andrew J. Dubrin – strategic planning. However, organization does not have long-term objectives. They work only two or three months ahead, because serious forecasting of all the factors related with tourists (economic growth, interest in resort, people expenses on accommodation in hotel, weather) would be time and money consuming. It is not worthwhile to seriously forecast such things for small hotel. Director’s strategic planing mostly includes such things like choosing right advertising, service price, and wages for employees, etc. Supervision of personnel is democratic; decision-making is done in a group discussion. But this applies only to operational decisions. Strategic decisions, however, are made by director. Director controls all personnel and their work. He defines the need results, compares the actual situation with standards and takes correct actions if necessary. Although company does not have more managers, as professionals, it seems that receptionist performs middle-level manager functions. His main activity is room-service management. Receptionist has final word when choosing maids and participates in advertising of the hotel. Only the priorities are set by director. There is a tendency for employees to postpone certain tasks to as late as possible. Therefore the same amount of time is also spent on controlling. Room-service manager does the controlling of quality and speed of service. Supervision of employees by editor in chief seems to be autocratic, because final decisions are always made by him. So there are two kinds of supervision in the company: democratic supervision of editor in chief and editor and autocratic supervision of other employees. Operations manager, by assigning tasks, plan the outlook of the current magazine issue. Planning, controlling, organizing of articles is done by editor. If I had a chance, I would name the editor as a lower level manager, because his work is also very much related with managerial activities. Editor keeps in touch with article contributors, assign tasks to them, to fulfill the current issue article needs set by editor in chief. The editor of publishing company does the article selection process, as well as influencing contributors to write what the magazine needs. So he spends most of his time on leading and controlling. After receiving and reviewing articles, he gives them to the editor in chief, who tells his subordinate stylist to correct them. Final outlook of the articles in the magazine is done by designer and paste-up artists under control of editor in chief. Contributors do not have any written agreements or work contracts with the company, therefore they have a freedom to submit their product to the company which they prefer to. In that case, it is very complicated for the company to persuade them submit their best work for the magazine. Money is the biggest motivator, according to the magazine staff, but the rates are kept in secret. When I asked, if all employees of the same position and all contributors writing for example one full A4 format page would earn the same, I have got the answer – no. Rates especially vary for contributors. Well-known and regarded contributors tend to earn much more than beginners. Work appraisal is usually done by editor and editor in chief. They do not follow any criteria while evaluating contributor’s works, so evaluation is subjective. Full-time employees receive fixed-salary. To sum up, after analyzing organization I could say that major part of total revenue and capital investment is spent on production operations. Operation manager seems to play the key role in the company, despite the fact, that he is not on the peak of organization structure. Production operations typically account for 70 - 80% of a firm’s assets, expenditure and people. References 1. Louis E. Boone, David L. Kurtz “Management. Fourth edition.” 1992 2. Andrew J. DuBrin “Essentials of Management”, 1991 3. E. Lawler. “Organizational Dynamics”, 1988 4. James B. Dilworth “Production and operation management”, 1986 5. Chris Jarvis. http://sol.brunel.ac.uk/~jarvis/bola/index.html 6. Rajat Cawla Project “Development of management though” http://www.projectshub.com/projects/50009/50009a.htm

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