ORGANIZATION DEVELOPMENT AND CHANGE

A Written Analysis of the case “Roaring Dragon Hotel”

Submitted to:
Prof. Ranjeet Nambudiri

Submitted by:
Group 7, Section B

Roll No. Name

2022PGP084 Aritra Ray

2022PGP191 Kaniska Raj Sinha

2022PGP454 Yasar Ali

2022PGP425 Tushar Tanay

2022PGP617 Amitesh Ranjan

2022PGP604 Ruchi Verma

2022PGP281 Piyush Pise

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Letter of Transmittal

July 12, 2023

Prof. Ranjeet Nambudiri
Indian Institute of Management, Indore
India

Subject: Written analysis of the case “Roaring Dragon Hotel”

Dear Sir,

As per the ODC curriculum, we are pleased to submit a written analysis of the case “Roaring
Dragon Hotel”.
The following pages contain a comprehensive report of the insights that were found while
investigating and analyzing the case and its related issues. We went through all the possible
alternatives that were available to us. Based on our evaluation criteria we came to the
conclusion and devised an action plan accordingly. According to our analysis, this option will
have the least negative impact and repercussions on the implementation of change for the
benefit of all parties involved.
We have taken care to analyze the case most sincerely and are willing to have a necessary
discussion if the need arises.

Yours sincerely,
Group 7
Section B

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EXECUTIVE SUMMARY
The case presents a classic example of significant challenges involved in the implementation
of changes in an established organization. The paradigm shift in economy demanded RDH, a
state-owned enterprise to change its management style to cater to the need of the new era and
hand it over to Hotel International. Things take a sour turn when the new management of Hotel
International is not able to meet the expectations of the stakeholders involved, i.e., Erhi T’s
directors and provincial government officials & the employees. This report critically examines
the situation and options available to the re-instated management of RDH, i.e., GM Tian Wen
and his team. The alternatives that are available to them are focusing on sticking to the Chinese
roots, with a modern outlook, which includes actions like training existing employees,
streamlining the workforce, and working on using the old Chinese wing of the hotel as a
competitive advantage. The other safe alternatives available to them are to incentivize the
employees to keep them motivated and prevent further discontent in the future or takeover by
Chinese International Hotel.

The final recommendation is to maintain Chinese origins while adopting a modern perspective,
which includes training current employees, streamlining the workforce, and working to use the
old Chinese wing of the hotel as a competitive advantage.

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 TABLE OF CONTENTS

Contents Page No.

SITUATION ANALYSIS 5

PROBLEM STATEMENT 6

ALTERNATIVES AVAILABLE 7

CRITERIA FOR EVALUATION 7

EVALUATION OF OPTIONS 7

RECOMMENDATION 9

ACTION PLAN 9

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SITUATION ANALYSIS
RDH was a government-owned company. The authority to make decisions belonged to Erhi T
and the provincial government. It was one of the first three-star hotels in southwest China and
one of the finest premium guesthouses in the region. It possessed an excellent reputation among
the general public. The region was gradually shifting from a planned economy mentality to a
decentralized economy.
The intended economic structure did not align with RDH's current management style. Of late,
there has been a decline in popularity and income. This, in part, is because of a relaxed type of
organizational culture espoused by the then-Chinese General Manager Tien Wen’s
management practices which were from the planned economy era. There was very little concern
for the enhancement or expansion of the hotel’s business. Therefore, it became imperative to
revise the hotel's management practices to accomplish the hotel's maximum potential.

The provincial administration saw the need for RDH to be modernized so that it could adapt to
the changing times. They hired Hotel International (HI) in April 2002 with the intention of
enhancing the hotel's service quality and profitability. In April 2002, the transition
commenced. HI's designated general manager, Paul Fortune, was in charge of facilitating the
transition. The team's implementation of changes resulted in negative financial and employee
motivation outcomes. There were considerable conflicts between the functions of new and
existing employees, which resulted in a significant number of skilled and seasoned employees
departing the hotel for rival competitors. The burden increased, and the employees lost their
sense of camaraderie. The occupancy rate averaged only 6%, which was 14 percentage points
less than the competition in the same region. With little to no financial flow, the new
management was forced to rely on Erhi T.'s contributions. The immediate rectification was
done by the reinstatement of the previous administration. The Erhi T board and provincial
government officials terminated the contract with Hotel International and reinstated the former
general manager, Tian Wen, due to the deplorable state of affairs and the increasing
unprofitability of the business.
The situation in the present case can be analyzed using Lewin’s Change Management Model.
The concept of change management is applicable to nearly all businesses today, but the way
change is managed is of the utmost importance. Kurt Lewin created the Unfreeze-Change-
Refreeze paradigm in 1940 using the analogy of reshaping a block of ice.

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Unfreeze: Preparing the organization to embrace change requires communicating the necessity
of the change. In this instance, this phase was disregarded, and change processes were initiated
without consulting the employees.
Change: In this stage, individuals begin to resolve their uncertainty and seek out new methods
of doing things. However, the transition from defrost to transformation is not instantaneous and
requires time. At the Roaring Dragon Hotel, an endeavor was made to accelerate the change,
resulting in confusion among all parties involved.
Refreeze: When the changes are taking shape and employees have embraced the new methods
of working, the company is prepared to refreeze, restoring the organization's stability. Changes
should be rooted in the organization's culture, and new methods of change maintenance should
be developed.

SWOT Analysis of RDH is presented below:

Strengths: Weaknesses:
➢ 50 years of experience in Hospitality ➢ Traditional management style
➢ Strong industry connections of employees ➢ Employees doing personal business
(Guanxi) while working hours
➢ Relaxed organizational culture ➢ Lack of professionalism
➢ The feeling of privilege associated with ➢ Less number of English-speaking
working at RDH employees
➢ Presence of a n old-Chinese wing and a ➢ Nepotism in the employee recruitment
modern Western wing

Opportunities:
➢ Rise of the market economy
➢ Expansion to a 5-star International Hotel
Threats:
- Decline in popularity and income
- Need for modernization
- Takeover by International hotel chain
- Business dependent upon employee
connections

PROBLEM STATEMENT
Given the current and impending forces of change, what should RDH's general manager Tian
Wen do to assure the company's survival and growth?

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ALTERNATIVES AVAILABLE
GM Tian Wen can adopt and implement any of the following options:
1. Keeping Chinese roots, with a modern outlook, which includes actions like training
existing employees, streamlining the workforce, and working on using the old Chinese
wing of the hotel as a competitive advantage.
2. Develop and implement an attractive incentive structure.
3. Takeover by a Chinese International Hotel, that would alleviate the problems of cross-
cultural dynamics.

CRITERIA FOR EVALUATION

1. Impact on RDH’s culture and resonance with Chinese culture
2. Impact on employee participation and productivity
3. Relations with significant quasi-partners (such as NuFu Travel)
4. Impact on social capital-guanxi

EVALUATION OF OPTIONS
For the evaluation of options and relevant criteria, a scale of 5 is considered. The description
of the scale is as follows:
1- Highly negative, 2- Negative, 3- Neutral, 4- Positive, 5- Highly positive

Impact on Impact on Relations with Impact on

RDH’s culture employee significant social capital
and resonance participation quasi-partners guanxi
with Chinese and
culture productivity

Option 1 4 4 4 4

Option 2 3 2 3 3

Option 3 4 2 3 3

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Option 1: Keeping Chinese roots with a modern outlook, which includes actions like training
existing employees, streamlining the workforce, and working on using the old Chinese wing
of the hotel as a competitive advantage. (Score=16)
Hiring experts and professionals to educate and train the staff will help in enhancing the
potential of the hotel since the employees are some of the core contributors in the running of
the business. RDH’s culture would improve with improved knowledge and skill among the
employees. The hotel had 675 employees, which is a substantial number. A Voluntary
Retirement Scheme can be used to reduce this number over time. Thus, the older and relatively
inefficient employees can leave voluntarily and may be able to pass on their guanxi to the
remainder of the staff. Further, the local Chinese clientele favored the older, eastern wing of
the hotel over the newer, western wing. This could be used as a competitive advantage and
enhanced to increase the profit from local customers, with the proceeds being used to renovate
the contemporary section.

Option 2: Develop and implement an attractive incentive structure (Score=11)

The design and implementation of an alluring incentive structure will motivate employees to
improve their performance and reach new benchmarks. However, such a proposal might not be
well-received by the current workforce due to the increased burden and effort involved. As a
result, it will cause a minor disruption in the current organizational culture. This process
wouldn't disturb the guanxi very much.

Option 3: Takeover by a Chinese International Hotel (Score=12)

RDH has the option of attempting internationalization once more by acquiring a Chinese hotel
behemoth. This would resolve the issues encountered when working with HI, specifically
British administration, international payments, and cross-cultural dynamics. A Chinese
corporation operating under comparable conditions would execute the modernization task more
effectively. Since the international hotel is in China, we believe the emphasis will be on
blending Chinese and international culture, which will be a welcome change for both
international and domestic guests. However, this comes with the danger of losing customers
with strong Chinese values. Since the new leadership is also Chinese, the concept of Guanxi is
applicable. This will contribute to the expansion of the hotel. But the hotel's modernization will
prevent employees from wasting time and leveraging their connections for career advancement.

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RECOMMENDATION
Evaluating the various alternatives against the selected criteria, we recommend that the best
way going forward for GM Tian Wen is Option-1. By maintaining Chinese roots with a modern
perspective, we ensure that we maintain the various Chinese practices that are valued by our
consumers while also ensuring growth and efficiency. We recommend employing a consultant
well-versed in Chinese culture to recommend the necessary organizational structure. Moreover,
we believe that all stakeholders, including employees, should be informed of and involved in
the change process.

ACTION PLAN
1. Set up a meeting with Erhi T’s directors and provincial government officials.
2. Convince them of the plan and vision of the hotel
3. Hire experts and professionals from the industry
4. Train the staff starting from the top management
5. Gather feedback from the participants
6. Work on the improvement of the training, on the basis of the feedback received.
7. Create and implement a Voluntary Retirement Program to streamline the workforce.
8. Create a plan to leverage the older eastern wing of the hotel, that is favored by Chinese
Business customers.