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Hotels Comparison: Risk Identification, Evaluation, & Mitigation Coursework

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Updated: Jun 30th, 2022

Results: Within Case Analysis

Hotel A

Introduction About the Hotel

The hotel belongs to an international luxury five-star hospitality company that was founded in 1960 in Toronto, Canada. Due to the constant increase in size and recognition, the chain has grown significantly, including its establishment of two branches in the UAE in 2014. There are 237 rooms in the UAE hotel with 6 people working in the purchasing department, 160 employees being represented in each branch, and 36,000 workers globally. In the purchasing department of this hotel, there is one manager, one assistant, one supervisor, two receiving, and two store clerks.

Risk Identification

Although knowledge loss is not directly identified as a high problem of this hotel, there are several important risks associated with the availability of urgent items, quality, delivery, waste, and shortages at the inventory level. There are no specific documented risk management processes, and most of the knowledge about fresh eatable products or the number of received materials has to be shared in the department. The way how employees exchange information determines many working processes. Therefore, the information possessed by the purchasing manager can influence the quality and delivery of services and should never be neglected. The sudden departure of this person can become a serious risk for the department and the hotel. Still, the manager should inform about the departure beforehand to prepare another person for this job, share gained knowledge and contacts, and identify the main goals and principles of work.

Risk Evaluation

Taking into consideration the fact that there is no tendency to keep all valuable knowledge with one individual, the system of knowledge sharing is perfectly developed in the hotel. To predicted unwanted outcomes or new challenges, all the information “about towels or bedsheets” has to be handed over before the departure of the purchasing manager during a reasonable amount of time. As a rule, the period from one to three months is necessary to train a new manager, unless the already prepared insider takes this position. In addition, it is important to understand that some knowledge about the market, network, and social contacts that are based on friendly ties can be lost because this type of information cannot be easily transferred. The knowledge about products, systems, and suppliers would remain in the organization and can be used by a new manager.

Risk Mitigation

The risks that can be associated with the departure of the purchasing manager and the loss of knowledge are minor for the hotel. The reasons for such positive outcomes are the decentralized strategy of sharing knowledge and duties and proactive procedures in dealing with the risks. The assistant supervisor usually has authority and access to all the critical information about the hotel and its relationships with clients, suppliers, and other stakeholders. This position can be fast filled with a new person who works at another branch using the information that can be transferred through written channels of communication or oral communication. The purchasing manager can document his or her knowledge and teach employees how to employ the notes. An important aspect of risk mitigation is educating the purchasing supervisor about price negotiation. In general, sharing knowledge and delegating responsibilities will promote the hotel’s functioning at the highest level.

Hotel B

Introduction About the Hotel

The hotel, the headquarters of which are located in Washington, DC, USA, belongs to the chain of over 5,700 hotels in over 110 countries. It was created in 1927 and was firstly established in the UAE in 1993. Overall, the hotel chain employs approximately 127,500 people worldwide and 400 employees in the UAE hotel. This five-star hotel has in total 500 rooms (375 hotel rooms and others are used as hotel apartments). The purchasing department is managed by four specialists: the purchasing manager, two purchasing assistants, and a clerk.

Risk Identification

The purchasing department is centralized meaning that the only person has the right to talk to suppliers. When being asked about potential risks for the organization, many hotel managers identify the interruption of hotel operations, delivery problems, system breakdown, and quality challenges and neglect the loss of knowledge as a serious risk for the hotel. The interviewed managers remark that this risk is not great despite having some effect on the hotel. The purchasing manager has valuable knowledge of technical, managerial, relational, and strategic issues. This type of knowledge is documented in the system and may be related to both external and internal environments, including the relationships with suppliers, negotiations, risk prediction, and the quality of products and services. According to the HR manager, the mentioned risk is important since, in case of the purchasing manager leaves, much time will be needed to regain the trust of the suppliers.

Risk Evaluation

All of the interviewed managers agree that the work of the hotel does not undergo considerable changes because of the purchasing manager’s departure. In some cases, this change can even be beneficial since it would promote team-building skills and enhance the team’s work. The purchasing manager reports that subordinates have been trained to perform the functions during the last six months, and they should not be confused about this change. The HR manager and the general manager also agree that no direct harm would be caused by day-to-day operations, but the fulfillment of some of them might slow down. The knowledge that is based on experience would be lost, as well as the already developed communicative skills and the expertise in how to train people. Still, information about suppliers, products, business relationships, quality requirements, and routine operations, including letters and requests, would definitely remain in the purchasing department.

Risk Mitigation

All of the managers are convinced that their hotel is capable of mitigating risks associated with knowledge loss. The primary reason for being able to cope with dangerous situations is that the hotel is proactive and resilient since much attention is paid to employee training and development. Another step is that the support of knowledge is promoted through job rotation (recruiting experienced employees), which allows people to replace one another in case of an emergency. One more approach to protecting knowledge is the employment of the purchasing system BIRCHSTREET that helps “to minimize the effect of key employee departure” by creating a special database with all hotel transactions being reported and retrieved. Finally, a positive approach to mitigating risks is represented by morning briefings during which financial figures and updates on job tasks are discussed.

Hotel C

Introduction About the Hotel

This four-star hotel was established in the UAE in 1978. No clear information about the number of employees locally and globally can be found at this moment. The hotel has the capacity of 253 rooms in the main branch, 100 villas, and 170 rooms in the Oceanic branch. The purchasing department of the main branch employs five full-time workers. The material manager completes the purchasing function, one person receives orders, one person is responsible for cost control, two people are involved in handling the stores, and one secretary assists the material manager.

Risk Identification

Despite the fact that a lot of the information is documented in the form of excel documents and flash reports by a cost controller or a quality report manager, there is still a great risk of key employee turnover and knowledge loss for the purchasing function. The problem is that almost all of the documentation only exists in the paper format. Thus, when the hotel loses the cost controller, the expenses will rise dramatically and put the facility at financial risk or loss. Valuable knowledge includes local knowledge that is based on experience and business relationships, cost management, mental and emotional aspects for gathering information from different sources, and the ability to develop plans and negotiate. In addition, interpersonal skills and the peculiarities of the relationships with suppliers play an important role in the department.

Risk Evaluation

They interviewed specialists admit that the hotel’s performance would go down temporarily in case of the purchasing manager’s departure. However, they are unable to predict the long-term consequences of such a situation. The knowledge about the market experience, negotiation skills, item specifications from the top of the head, and contacts and interpersonal skills can be gone with the manager’s department. The prices for new contracts would also be definitely lost, and the seriousness of this risk depends on the time needed to hire a new purchasing manager and train him. Regardless of the applicant’s experience, at least one month of training is required, which includes two weeks of supervised work and two weeks of unsupervised work. For some period of time, the assistant or secretary may replace the manager as a part of a fail-safe plan until a new, right person is found.

Risk Mitigation

This hotel is proactive in its intentions to deal with the risk of knowledge loss. For example, there is an obligation for the secretary to fulfill the duties of the manager in case of the latter’s departure without any notifications. In addition, regular budget plans and forecasts are used to scan the hotel’s human resources and identify potential threats. Continuous training of all managers is helpful to deal with risks since all executives have some knowledge that can be used to replace the person who has left. To minimize the effects of the purchasing manager’s departure, the hotel has the policy of leaving a 2- or 3-month notice. Thus, there is enough time to share the knowledge and perform all the necessary education or training. Finally, the risks can be mitigated due to the fact that the hotel has long-term relationships with its suppliers.

Hotel D

Introduction About the Hotel

The hotel was created in 1949 and established in the UAE (Dubai) in 2003. The facility belongs to the chain of five-star hotels and employs 7,311 people full-time, globally. In the analyzed branch, around 2,000 individuals are employed, nearly 15-20 of whom work in the purchasing department. There is the director of procurement, the assistant manager, the procurement executive (though there is no right person in the hotel at this moment), several procurement officers, and several storekeepers. The UAE hotel has approximately 300 rooms, including all possible types and depending on the class required.

Risk Identification

The purchasing manager is no effective procurement policy, the process of work may be disrupted or delayed. In case of crisis, the hotel will suffer if there is no recovery plan in action. Managers consider the risk of losing valuable knowledge as a crucial one. Valuable knowledge includes the conditions under which long-term decisions are made, the qualifications that should be defined while managing a team, the necessity to build strong employee relationships, and the cooperation with other departments regarding the technical demands of the team. The department tries to keep all the necessary information in the system so any team member can use it. Still, some knowledge stays limited to certain people, and the intervention of the IT department is required. The loss of knowledge leads to new problems such as corruption, unreliable suppliers, transparency, and a crisis in relationships.

Risk Evaluation

The risk of knowledge loss due to turnover remains a crucial aspect for the hotel system and the purchasing department in particular. It is hard and time-consuming to find a person who can understand the essence of suppliers’ work and recognize the value. It is important to learn the history of outside relationships with suppliers and recognize existing problems and benefits. Quotations, invoices, requirements, and contact details can be found even after the departure of the manager. However, such expertise gained skills, and specific approaches to cooperate with supplies would be lost forever. The significance of knowledge transfer since this process is lengthy and multi-faceted should be mentioned. This risk is associated with the training of the specialist who will replace the leaving manager. Some loyal suppliers may be lost if they have been committed to the person who quits. It may take up from two to six months for a new person to be entirely trained and prepared to substitute the purchasing manager.

Risk Mitigation

The managers admit that they try to be reactive to the sources. For example, when the risk of corruption is observed, there is a need to organize a meeting and explain to the staff what is happening. The participation of all the team members is integral in mitigating the risk. Therefore, the primary strategy of risk mitigation is the arrangement of positive relationships between employees. Knowledge transferring may occur through evaluations, reports, regular meetings, and conferences. In addition, the hotel tries to become more resilient when it takes the steps to deal with the departure of employees and “find someone new for an empty position”. The number of qualified employees and equal contributions play an important role in mitigating the risk of knowledge loss. Special attention is also paid to motivation since the employees whose efforts are acknowledged and whose work is properly evaluated do not tend to leave the company.

Hotel E

Introduction About the Hotel

This four-star hotel was established in Dubai in 1996. However, its official year of creation is 2008. The UAE branch has 100 rooms, but a construction project is underway to add 40 more rooms and some upgraded facilities such as more restaurants and a bigger swimming pool. The number of full-time employees in three UAE branches is 212 with one person completing the purchasing function in the department, and the global number remains unknown at this moment. The manager has to make purchases for six other major departments of the hotel.

Risk Identification

The peculiar feature of the manager is that he is aware of the needs of other departments because “everything comes through the purchasing department, but everything is done the same way for the purchasing department”. This manager makes final decisions, and his valuable knowledge includes the demands and offers of suppliers, service quality, delivery time, and connections with other people in purchasing in the country. All information is documented, and the papers can be available to the manager anytime. The HR manager and the Chief Accountant are the people who also have access to purchasing information in the hotel. The level of responsibility of one person in the department makes the risk of knowledge loss a very small concern for the organization. The major risks of the purchasing department include delays, dissatisfied suppliers, the unavailability of suppliers, unexpected extra occupancy, and the hazard analysis and critical control points (HACCP) certifications.

Risk Evaluation

In case of the purchasing manager’s departure, such valuable aspects as interpersonal skills, market experience, and negotiation ability would be lost. It will be hard to understand how to work with specific suppliers and deal with different things, how to create friendly relationships with new people and know where to squeeze, or how to organize meetings with salespeople and sign new contracts. However, item specifications and the possibility to study the purchase history can be retained, and the HR manager can partially replace the purchasing manager who suddenly departs for some period of time. About 2-3 months are required to prepare a new person for this position, depending on his/her background and skills. In addition, there is a rule to notice about the departure in 1-2 months. Therefore, the loss of knowledge is not a big issue for the hotel.

Risk Mitigation

Managers admit that the hotel is reactive in dealing with the risk of knowledge loss. There is no need to pay special attention to everything in the department, and the changes are required only when an event occurs. One of the most effective risk mitigation techniques is to train employees regularly and share valuable knowledge about past quotations and standards. Daily meetings are held with the general manager, where valuable information is discussed. Thus, all managers are aware of the main processes happening in the hotel. Additionally, there are a few employees at the procurement department that can cope with the manager’s duties in case of emergency. The hotel uses a knowledge management program that is easy to use and secure. The program requires passwords to utilize it, and employees can access the data they need. The hotel’s risk mitigation efforts are expected to protect it from major resulting from the purchasing manager’s departure.

Hotel F

Introduction About the Hotel

The hotel was created in 1993, and its main location is in Dubai. This is a five-star hotel where 300 employees work full time with a capacity of 317 rooms. The worldwide number of employees is not clearly stated in the official sources. The purchasing department includes four people, including one head of the department, a categories manager, and two coordinators.

Risk Identification

The major risks identified by the purchasing manager are unreliable suppliers, security, changing suppliers, non-availability of service, and software failures. In addition to these, the categories manager names such problems as non-compliance with operations’ objectives, hygiene standards, and the ISO 14001 breach. Valuable knowledge of the department’s manager includes data analysis, negotiation skills, project management, contracts, and leadership. Though there are always some documents to note the details of the work are used, new valuable knowledge appears regularly. Therefore, there is a threat of knowledge loss exists and has to be mitigated. In addition, the purchase manager knows know how to motivate employees, how to manage challenges, and deliver information in a short period of time. The creation of strong supplier relationships is the experience that has to be identified in the analysis.

Risk Evaluation

The risk of knowledge loss is not regarded as a very serious one. According to the purchasing manager, his departure would be a disappointment, but his knowledge could be transferred to the new manager in several months, depending on his/her experience and knowledge. Such valuable knowledge as effective data analysis can be lost forever as soon as the manager leaves the hotel. However, there is a good chance that the description of all significant procedures and policies can be left and improved through experience and collaboration. The hotel has enough resources to train a new manager in about a month, depending on his experience and eagerness to learn. Still, the manager’s departure leads to the loss of necessary knowledge that has to be replaced in a short period of time to promote new suppliers’ agreements and evaluations.

Risk Mitigation

The hotel is proactive by its nature because all the employees undergo regular training and report their duties to improve the experience. Sharing information all the time inside the department is frequently practiced. All managers admit that the departure of the purchasing manager may have a negative effect, but it will be short until a new member is found. There is enough time for the manager to share his knowledge and supervise the work of the prospective substitute. According to the categories manager, the risks are mitigated through constant training and information sharing. A helpful method of reducing risks is the regular audit and evaluation of employees’ knowledge that are performed by the HR department. Finally, employees’ resilience and dedication are the factors that promote risk mitigation.

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IvyPanda. 2022. "Hotels Comparison: Risk Identification, Evaluation, & Mitigation." June 30, 2022. https://ivypanda.com/essays/hotels-comparison-case-study/.

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