Current profit margins-current cost of benefits

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Reference no: EM13952932

The Situation

A major hotel company in the U.S. has an opportunity with the potential for significantly increasing its revenue base and global market share. There are, however, human resource issues that must be considered. The nonunion, U.S.-based company has the opportunity to purchase a chain of hotels in Italy. The Italian company's hotel employees are represented by unions and are accustomed to many more benefits-such as more time off, more expansive health care benefits, and more say in the operation of the hotels-than U.S. employees. They also have boundaries around their work schedules and limitations on the work they will perform in the hotels. In addition, the labor market for hotel employees is very limited. The employees available for work in the cities where the hotels are located require extensive training.

If the hotel chain is purchased, there will be a need to retrain all employees and possibly change shifts worked and jobs performed, as well as limit input into decisions about the operation of the hotels. It is most likely that U.S.-based employees will need to help with the training of current employees; however, most of them have never traveled to Europe and therefore are not familiar with the culture. One known difference in the culture is the lack of EEO laws and regulations and a tolerance for sexual harassment.

The executive team, without the CEO present, has convened a meeting to discuss whether the hotel chain should be purchased; what the risks and rewards could be; and if the decision is made to purchase the chain, what needs to be addressed and what should be included in the budget to ensure a smooth transition of ownership.

Formulating Assumptions

Note that not all of the specifics about the possible acquisition have been given, such as the cost of the acquisition, the number of hotels and employees, the current profit margins, the current cost of benefits as a percentage of total labor costs, competitive data on the room rates, etc. If you feel it is necessary to make assumptions about these factors prior to your role play, do so, and state them in your study group conference area.

Reference no: EM13952932

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