Sie sind auf Seite 1von 19

c c

 
   
 
  


  


Mischal Menden
UoD: 1000202590
MA autumn semester 2010
Business Analysis and decision making
CW:1
Ms. Zainab Atta
04/2/2011
Ê
= c = 

The purpose of this paper is to critically analyze the business decision made by the Radisson
BLU Dubai Deira Creek. This hotel implemented a new environmental cooling system, called
thermal cooling. A brief introduction about the hotel in the current busi ness situation is
stipulated in the introduction. Further on an external analysis is constructed, by applying the
PESTEL and SWOT theoretical framework. The decision making process is being analyzed
through the application of a decision tree model. The bus iness decision taken by this hotel is
assessed to efficient and effective, according to several authors from different fields.
Moreover the stated aim and objectives are being revisited in the conclusion, summing up
the produced knowledge and analysis.
   c 
Abstract ................................ ................................ ................................ ................................ . 2
Introduction ................................ ................................ ................................ ........................... 4
Aim and Objectives ................................ ................................ ................................ ................ 5
Methodology................................ ................................ ................................ .......................... 6
Analysis ................................ ................................ ................................ ................................ .. 7
PESTEL ................................ ................................ ................................ ................................ 7
The Political environment ................................ ................................ ............................... 7
The Economical environment ................................ ................................ ......................... 8
The Social environment ................................ ................................ ................................ .. 8
The Technological environment ................................ ................................ ...................... 8
The Environmental environment ................................ ................................ .................... 9
The Legal environment ................................ ................................ ................................ ... 9
SWOT ................................ ................................ ................................ ............................... 10
Decision-Tree ................................ ................................ ................................ ................... 12
Conclusion................................ ................................ ................................ ............................ 15
References ................................ ................................ ................................ ........................... 16
ÿ   ÿ  
As Steinhouse (2010) pointed out, decision making in the classical sense begins with
assuming that perfect information is available to the decider. Furthermore Schraeder and
Morrison(2005) stressed out that `decision making is one of the most fundamental
components of effective management and leadership.´ Moreover the same authors pointed
out that with the given importance of effective business decisio ns, it is questionable why so
few leaders and additionally their organizations, receive formal training. Making effective
and proper decisions in such a fast paced industry like Hospitality is one of the biggest
challenges managers are facing. Not only because of the time constraint they are having, wh
The Radisson BLU Hotel in Dubai is the oldest 5 Star Hotel located directly at the Creek in
Dubai, UAE. In order to stay competitive and present at such a fast market, innovative and
entrepreneurial motivation are the key success factors for staying sustainable (Drucker,
1985, Schumpeter, 1950). In order to achieve this state the latest cutting -edge technology
combined with environmental friendliness are the main sectors important to customers
(Reference). The Radisson BLU in Dubai decided in 2010 to invest 34 0,000$ in order to
receive the international Green Globe Certification (GGC). As Hamziya (2010) stipulated, the
demand of the customers for ͞green͟ and ͞sustainable͟ practices created the idea, for this
hotel. Furthermore she pointed out, that the investment was mostly done in order to
replace insufficient old air-conditioning system, coupled with the energy saving wheel, which
draws warm air from the outside and cools it down before sending it through the chillers.
The decision making process, which resulted in the order of this new cooling system, is what
is going to be critically analyzed within this paper. Managers have to make decisions on day -
to-day basis, sometimes right at the spot, but sometimes as well through a critical path
analysis or other decision-making-tools. The author will apply different tools in order to
assess the decision made. A PESTEL and SWOT analysis has been created in order to point
out the necessity of this innovation. Further more a decision-tree will help understand why,
this particular hotel choose to invest in this particular item.
The greening of Hotels becomes more and more important nowadays, especially because of
the increasing green-house effect and the melting of the polar caps. In order to compete
successfully, as previously stated, organization need to reconsider their CO 2 emission, or
carbon footprint.
Being awarded with a GGC certificate is not only good for the environment, furthermore it
can be used for advertisements, PR campaigns etc. From a confidential source the author
acquired that the hotel had an increase in its REVPAR and occupation since implementing
the new thermal cooling system.

= ÿ =     ÿ c 
The aim of this paper is, to critically assess a business decision made, by the Radisson BLU in
Dubai.
In order to achieve the above stated aim, following objectives have been created:
1. Ê To critically analysis the external environment, in order to determine whether or not
the decision made was necessary.
2. Ê To effectively apply analytic tools, to assess the efficiency and necessity of this
particular decision
3. Ê To combine the gained knowledge, concluding the effectiveness and appropriateness
of the decision made.


    !" 
In order to complete this paper and a chieve stated aim and objectives the author uses
secondary data. According to Saunders et al. (2007) this is data which was previously
collected with a different purpose. The resources which are available to the author are the
library of the Swiss Hotel Management School Leysin, as well as the Emerald and Ebsco
database, additionally the governmental page of the United Arab Emirates, as well as a
previous submitted report by the same author. All these different journals, articles and
papers will provide app ropriate reliability and validity to the stated. The epistemological
stance, applied by the author, is constructivism. According to Collis and Hussey (2009)
constructivism, constructs new knowledge based on already existing one. This stance is the
most appropriate because, only secondary data has been used and the purpose of this paper
is to assess previously gathered data. Moreover enables this stance the author to synthesize
the existing knowledge and create new knowledge. The Limitations in this paper are the
availability of proper data, as well as the reliability and validity of secondary data.


= ="c ÿc 
In order to obtain a clear picture of the current external situation, in which the business
decision was taken, the author choose to conduct first a PESTEL and than a SWOT analysis.
After analyzing these two theoretical frameworks, the author will provide a decision tree,
following through the steps the decider, took or should have taken.

#c
According to Johnson (2008) provides the PESTEL analy sis a complete list of influences on
the possibility of a strategy to succeed or fail. The PESTEL analysis used for this paper has
been adopted from a previously generated report, by the same author, on the effectiveness
of a competitive business strategy in the Radisson BLU Dubai Deira Cre ek (Menden, 2010) .

  # ÿ ÿ=  ÿ   

Π 
 
The United Arab Emirates are trade free country. This is a necessity, when the
competitiveness and productivity are to be considered (Trade Policy Review 2009).
Moreover are the United Arab Emirates an active body in the WTO (World Trade
Organization) as well as is in ongoing negotiations with other GCC and European countries in
order to establish a Free-Trade-Agreement (WTO, 2010). The government of the United Arab
Emirates encourages FDI͛s (foreign direct investments).
(Menden, 2010) 
     
The Federal Supreme Council has legislative and executive powers.
It ratifies federal laws and decrees, plans general policy, approves the nomination of the
Prime Minister and accepts his resignation. It also relieves him of his post on the
recommendation of the President. (Ahmed, 2007)
The most important development during 2007 was a new UAE Government Strategy which
includes 21 individual topics in the six main sectors of social development, economic
development, public sector development, justice and safety, infrastructure and rural areas
development (UAE government, 2010).
In general is the UAE government open and respectful towards other cultural prospective
and treat them fairly and in peace. Although, according to Ahmed (2007) the rules and
regulations are becoming stricter with every year. (Menden, 2010)
 
      
The UAE is a member of the following international organizations: UN (ICAO, ILO, UPU,
WHO, WIPO); World Bank, International Monetary Fund (IMF), Arab League, Organization of
the Islamic Conference, Organization of Petroleum Exporting Countries, Organization of Arab
Petroleum Exporting Countries, and the Non-Aligned Movement, as well as at the
International Renewable Energy Agency (IRENA) (Bureau of near eastern affairs, 2010).
(Menden, 2010)

     ÿ=  ÿ     

Currently 3 million people live in Dubai from which 60% are in the workforce, out of which
13% are UAE Nationals and 87% foreigner expatriates. The UAE GDP increased by 15% to 450
billion dirhams in 2007 and the Economy grew even faster at a pace of 16.7% . Its GDP real
growth rate is 10%: shows $99 billion in oil revenues and $121 billion in non -oil revenues.
Foreign direct investment (FDI) in the economy is very high and appreciated. The country's
currency is called dirhams and its value relative to the dollar is 3.67, and 3.98 to the euro
(Bureau of near eastern affairs, 2010) . (Menden,2010)

  c ÿ = ÿ    

UAE citizens have a very high standard of living; financial positions have continuously
increased over time; very materialistic high society: lots of money to purchase houses, cars
and other material items. The society is open and free to all types of hotels, restaurants,
tourism, recreational activities and sports. Multicultural nature of the country: many
foreigners go there to work in well-paying positions.
(Cateora, 2007,68, Menden, 2010)

    !ÿ =  ÿ     

The largest part of the population consists out of very young professionals who are
extremely technologically-knowledgeable. Number of Internet users in the GCC region has
increased ten-fold since 1998 . The Internet and IT software solutions industries in the Gulf
region have doubled the rate of Europe . GCC show about 12% growth in the quantity of
pc/mac units sold by 2003, compared to the global growth of 8%. The UAE has the most
satellite, Internet and mobile phone users in the Middle East .
(Cateora, 2007, 68-69, Menden, 2010)
 
    ÿ   =  ÿ   
Few crops other than dates can be grown without irrigation .
360 days of sunshine > Large solar plants (Green UAE)
Launch of an Environment authority in 2008
End of 2010 on -shore and off-shore protected districts will double: 5 national parks by 2030
Environmental sustainability project was launched in 2009: The G3 guidelines will be met by
December 2010. HSM system is being implemented in 2008 (full achievement in 2011) .
Abu Dhabi Sustainability Excellences Group (SEG) is being created to watch and manage the
environment. The major aim is to find sustainable balance between development,
conservation and protection of its biodiversity.
(Environment Agency Abu Dhabi, 2010, Menden, 2010)

   !=  ÿ    

Health and Safety (HACCP) law has been established in 2006

   Π   
According to the UAE Labor Law (2007), companies are eligible to recruit both, nationals as
well as non-national (expats). When recruiting non -nationals, several medical tests and a
long lasting visa procedure needs to be done and paid by the hiring company. Furthermore,
every company is expected to have a ratio of 40 to 50 percent of well -qualified Emiratis
working within. On the other hand are the costs for employing an Emirati about 50 percent
higher (National Human Resource Development Authority, 2004). Included in this cost
calculation is the cut back from a `normal´ six-day-working week to a five-day-working week
(Wallin, 2005 and Goldwin, 2006).The National Human Resource Development Authority
(2004) defined Emiratisation as a program with the focus on the increase of national workers
within the UAE. No labor tax (Tax-free income)
Hotels are allowed to serve alcohol if licensed even throughout the holy month of Ramadan
Liquor shops are available for members (minimum income 3000 UAE dirham͛s/month and
Non-Muslim). No share of flats between males and females (except of married or engaged
couples).
(Employment contract, 2006; UAE labor law, 2007; UAE g overnment, 2010; Jeffreys, 2008;
Menden, 2010)
From the PESTEL analysis it is obvious that environmental concerns and issues are of high
interest to Dubai. The external environment, where this hotel is located at, supports the
decision of ͞going green͟. It can be argued now, why the hotel choose to exchange their air -
conditioning system. Furthermore the question arises, why the hotel did not choose to use
solar energy in order to obtain the nece ssary power? Moreover it is questionable why the
hotels choose to first invest into a cooling system before starting to invest in sustainable and
green power. Furthermore, it can be argued that it is just a marketing campaign, because
when looking at what happened over the last decade in Dubai, environmental concerns have
never been of any interest. Man made islands have been built as well as new skyscrapers
have been opened daily. Why is it that these concerns became of interest just now? Since
the establishment of the Environmental protection department, more and more green
solutions have been implemented.
The SWOT analysis below, stipulates the internal environment of the Radisson BLU DDC.

c$
     c c  c Ê
c    Ê
Customer satisfaction strategies: Take over from the Intercontinental Hotels
͞Yes I can!͟ group in 2006; caused high-turnover
͞Stay your own way͟ Old building = high maintenance costs
͞Express yourself͟ Huge Labor cost due to the amount of F&B
Gold points plus outlets (16)
Oldest 5 star hotel in town; loyalty towards the Huge amount of unskilled labor
hotel
Wide range of F&B outlets
Well established brand (The Rezidor group)
with the CEO of the year 2010
90% of the managers are promoted from within
the company; brand loyalty
Huge Global presence
Ê
  c Ê
º º  

cÊ
Go Green Dubai: sustainability program High competition within walking distance:
awarded with the GGC certificate (300,000$). Sheraton, Hilton, Hyatt, Concorde
HACCP law due to European Management and Current economical situation:
early stages of HACCP have already been applied Ability to boost out of the recession
right from the beginning. Governmental status: fast changes due to
Metro station legislation
great accessibility and cooperation with the RTA New entrants due to less amount of money
(Road & Transport Authority) needed (51% from a local partner, mostly the
Arabic Restaurant (Emirati workforce) building)
Free-Trade-Agreement:
cooperation with global suppliers (known
suppliers from other Hotels within the Rezidor
group)
New Hotel classification categories
30% Tax on alcoholÊ
(Adopted from Menden, 2010)
Again the same conclusion can be drawn, as from the external environment above. Looking
at the PESTEL and SWOT together, it is clear that environmental innovation are great
opportunities for the hotel in order to not only stay sustainable but also to help saving the
world we are living in.
The Radisson BLU saw this opportunity and decided to invest in ͞going green͟. In order to
determine the efficiency and necessity of the exchange of the cooling system compared to
the usage of solar panels, will be determined by applying the decision -tree tool (Mindtools ,
2011).


 ÿcÿ %  
The Rudjer Boskovic Institute (2001) stressed out that, `decision trees are powerful and
popular tools for classification and prediction.´ Furthermore this institute argued that this
tool is particularly attractive because contrasting neural networks, decision -trees present
rules. The figure below indicates the process of the decision done by the Radisson BLU
Dubai. Estimations have been made for the probability of REVPAR increase. The probabilities
have been indicated with 50% or 0.5. The REVPAR has been adopted from the annual report
(Kleiven, K., 2010 ). Sustainable sources pointed out that if solar systems are implied, a high
initial cost is to be expected. Furthermore the building needs to be weatherized and
insulated to very high standards, which can only be found in new structures. The Radisson
BLU Dubai is over 30 years old. This points out that the probability of this structure to be
insulated and weatherized to the required standards is very low. Moreover is it highly
unlikely that buildings in the Middle East have such high standard of weatherization and
insulation.
300.000$*0,9= 270.000Φ
Thermal cooling = 80% chance
Solar cooling = 75% chance
(Wasantha, M, 2010) 
0,5* (84,-*276)= 11.592,-
Solar
GGC 21.804-350.000=-328.196
cooling 0,5* (74,-*276)= 10.212,-
certificate

-177.368+ (270.000*0,8)
=38.632,- 22.632- 200.000=-177.368

0,5* (88,-*276)= 12.144,-


Thermal
cooling 0,5* (76,-*276)= 10.488,-
New
environmental
laws
0,5* (80,-*276)= 11.040,-

21.804- 100.000= -78.296 Replace


ment 0,5* (78,-*276)= 10.764,-

10.902,-

No
10.902,- No 0,5* (79,-*276)= 10.902,-
certificate -
changes

DMS, 2010
From the figure above it is obvious, that the decision taken was made after careful
consideration of all the aspects influencing this process. The PESTEL and SWOT analysis
already pointed out that the external environment highly appreciates innovations
concerning the greening of buildings and especially hotels. On the other hand Sciencedaily
(2008) argued that solar cooling is the environmentally friendliest solution for air
conditioning system because of the application of `t he technology used in this mach ine,
which minimizes its environmental impact by combining the use of a lithium bromide
solution, which does not damage the ozone layer or increase the greenhouse effect, with a
reduction in the use of water by the machine. ´ On the contrary The Economist (2010)
stressed out that `Thermal coolers are an attractive option in places where hot water is
available on the cheap as ͞waste heat͟,´ this statement supports the decision made by the
hotel. Since the average temperature of Dubai is 28°C the coldest day i n winter is around
12°C and in summer temperatures rise to 55°C. Most of the water tanks are located at the
rooftops of the buildings; this is also fact for the Radisson BLU. Summing this up, hot water is
always available as well as the previously stipulated ͞waste heat͟. All this together make
perfect conditions for the application of thermal cooling, which was done by this particular
hotel. Furthermore the space needed fo r the amount of solar plants, which are needed to
supply the power for the air -conditioning system would require even more money. The
possibility of evaporative cooling, has been ignored in this decision because of it carbon
footprint, this footprint would have eliminated the chance of being GGC certified.
(Ecocooling, 2008).



   c ÿ  
In order to come up with an appropriate conclusion on t he gained knowledge, the author
revisits the earlier stated aim and objectives. Starting with the objectives;

To critically analysis the external environment, in order to determine whether or not the
decision made was necessary.
The external environment has been analyzed by applying a SWOT and PESTEL analysis. These
analyses pointed out the great importance of sustainability and environmental friendliness.
Not only because of the new departments established in this country, but also because of
the high competition and cutting-edge technologies available in this country. Summing up, it
determines that there was a necessity of making a decision towards going green, for this
particular hotel.
To effectively apply analytic tools, to assess the efficiency and necessity of this particular
decision.
A decision tree has been applied, in order to understand the decision making process the
general manager of this hotel went through. This tool points out that decision made, was
critically assessed before it was done, because all the different factors have been taken into
consideration. After constructing this analysis, it is clear that thermal cooling was the best
choice, not only because of its increase in REVPAR and occupancy, as previously stated, but
also because of it environmental friendliness.
To combine the gained knowledge, concluding the effectiveness and appropriateness of the
decision made.
Concluding the above met objectives, the author is able to point out that the decision, as
well as the process, was highly effective and appropriate. Although it can be argued, that
with evaporative cooling, the initial cost would have been less, as well as the operating cost.
On the other hand as stipulated earlier, this option would leave, even if only a small one, a
carbon footprint, which would have automatically resulted, that this hotel would not be
certified with the Global Green Certificate.
Summing up the concluded, the author is confident, that the objectives have been met to
the full extend. Furthermore resulting from this the aim of this paper; to critically assess a
business decision made, by the Radisson BLU in Dubai, has been fully achieved.
 &  c 

Ahmed. (2007) UAE Government a change in time. [online] available from: <ww w.uae.gov>
last viewed: February 1st 2011.

Bureau of near eastern affairs. (2010) Background note : United Arab Emirates. [online]
available from: http://www.state.gov/r/pa/ei/bgn/5444.htm last viewed: February 1st 2011.

Cateora, P. (2007) International Marketing. Boston: McGraw Hill Irwin.

CIA. (2009) The world factbook. [online] available from: https://www.cia.gov/library/


publications/the-world-factbook/geos/ae.html last viewed: January 30th 2011.

Collis, J. & Hussey R. (2009) Business Research. New York: Palgrave MacMillan.

Datadubai.com. (2010) Results for Deira Food Distributors. [online] available from:
<http://www.datadubai.com/index.php?keywords=Deira+food+distributors&main=site&sub
=search&sfields=0&stype=0> last viewed: February 2nd 2011.

DEG, (2010) Deutsche-Investitions- undEntwicklungsgesellschaft mbh; develoPPP.de [onl ine]


available from:
<http://www.deginvest.de/DE_Home/Leistungsangebot/Foerderprogramme/PPP-
Programm_neu/index.jsp last viewed: January 30th 2011.

Department of Tourism and Commerce Marketing A. (2010) DTCM introduces new hotel
classification: Five-start properties to have three categories. [online] available from:
<http://www.dubaitourism.ae/PressReleases/PressReleaseList/tabid/183/ctl/Details/mid/56
1/ItemID/2840/language/en-US/Default.aspx> last viewed: January 5th 2011.

Department of Tourism and Commerce Marketing B. (2010). DTCM͛s 2010 first half report
shows Dubai͛s growing appeal as a tourism hotspot. [online] available from:
<http://www.dubaitourism.ae/PressReleases/PressReleaseList/tabid/183/ctl/Details/mid/56
1/ItemID/2870/language/en-US/Default.aspx> last viewed: February 2nd 2011.

Drucker, P. (1985) Innovation and Entrepreneurship, Butterworth -Heinemann, Oxford.

Dubaifaqs.com. (2010) The Dubai Code of Conduct decency rules and laws. [online] Available
from: <http://www.dubaifaqs.com/dubai-code-of-conduct.php> last viewed: January 30th
2011.
EcoCooling, (2010) At Ecocooling our mission is to save the country 1% of its total energy bill.
This is equivalent to shutting down a power station. [online]available from:
<http://www.ecocooling.co.uk/> last viewed: February 3rd 2011.

Etisalat. (2009) UAE`s Number one mobile and internet provider. [online] available from:
<www.etisalat.ae > last viewed: January 30th 2011.

Godwin S. M. (2006) Globalization, Education and Emiratisation: A study of the United Arab
Emirates, The Electronical Journal of Information Systems in Developing Countries. 27 (1).
pp. 1-14.

HACCP-UAE. (2006) guidlines for the implementation of HACCP in the 5 Star Hotels in Dubai.
Radisson SAS standards.

Hamziya, F. (2010) Radisson BLU rewarded for going green. [online] available from:
<http://www.ttnworldwide.com/articles.aspx?id=1460&artid=10339 > last viewed: February
3rd 2011.

Human Rights Watch. (2010) UAE: NYU͛s Labor Rights Provisions Break New Ground. [online]
available from: <http://www.hrw.org/en/news/2010/02/03/uae -nyu-s-labor-rights-
provisions-break-new-ground> last viewed: January 30th 2011.

Johnson G., Scholes K., Whittington R. (2008) Exploring Corporate Strategy. 8 th ed. Harlow:
Pearson Education Limited.

Kleiven, K. (2010) Report for Q3 Rezidor. [online] avail able from: <http://media.corporate-
ir.net/media_files/IROL/20/205430/Q3-2010_Interim_Results_ENG.pdf > last viewed:
February 2nd 3022.

Lowtax.net A. (2010) Dubai: Country and foreign investment. [online] available from:
<http://lowtax.net/lowtax/html/dubai/jdbcfir.html#entry > last viewed: January 30th 2011.

Lowtax.net B. (2010) Dubai: Labor Regulation. [online] available from:


<http://www.lowtax.net/lowtax/html/dubai/jdblab.html > last viewed: February 3rd 2011.

Menden, M. (2010) Radisson BLU Dubai Deira Creek: A competitive business strategy.
Submitted to Mont Blanc University Center.

MindTools, (2010) Decision Trees ͞choosing by projecting, ͞expected outcome [online]


available from: <http://www.mindtools.com/dectree.html> last viewed: February 3rd 2011.
National Human Resource Development and Employment Authority. (2004) ë 

  

          o.
Employment and Human Resource Report, Part I. Dub ai, UAE.

Rezidor Hotels Group. (2010) [online] available from: < www.rezidor.com> last viewed:
February 1st 2011.

Rudjer Boskovic Institue, (2001) Decision Trees. [online] available from:


<http://dms.irb.hr/tutorial/tut_dtrees.php > last viewed: February 2nd 2011.

Road & Transport Authority. (2010) Dubai Metro Map. [online] available from:
<http://www.rta.ae/dubai_metro/english/planingyourjourney.html > last viewed :January
30th 2011.

Schraeder, M. and Morrison, R. (2005) Commander͛s evaluation in the context of busines s


decision-making: a multi-perspective approach. Development and Learning in Organizations
19(4) pp. 14-16.

Schumpeter, J.A. (1950) Capitalism, Socialism, and Democracy. New York: Harper & Row.

Sciencedaily, (2010) Solar cooling becomes a New -Air conditioning-System [online] available
from: http://www.sciencedaily.com/releases/2008/07/080714151427.htm last viewed:
February 3rd 2011.

Steinhouse, R. (2010) Strategic decisions in d ifficult times: stay artful and flexible, even when
the going gets tough. Strategic Directions 26 (9) pp.3 -4.

Sustainable sources, (2010) Solar Hot Water, Heating ans Cooling Systems. [online] available
from: <http://solarheatcool.sustainablesources.com/ > last viewed: February 2nd 2011.

The Economist, (2010) Keeping cool and green: Innovations in Air -conditioning systems
mean cooling down buildings is going to require less energy. available from:
<http://www.economist.com/node/16588677 > last viewed : February 3rd 2011.

Timeout Dubai. (2008) 5 star Hotels in Dubai. [online] available from:


<www.timeoutdubai.ae> last viewed: February 3rd 2011.

Toledo H. (2006) The Problems and Prospects of Emiratization: Immigration in an Imperfect


Labor Market. [online] available from:
<http://www.aus.edu/sbm/eco/docs/Emiratization_IZA.pdf> School of Busin ess and
Management. American University of Sharjah. Last viewed: February 3rd 2011.

UAE Labor Law. (2007) reproduced and translated by Gulftalent.com.


WTO. (2006) Trade policy review of the UAE. [online] available from :
http://www.wto.org/english/tratop_e/tpr_e/g162_e.doc last viewed: February 3rd 2011.