Convenience

216
Part 3:
Organizing
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
www.MyEbookNiche.eCrater.com

---

For several years, it’s been operated as a franchise unit
of a large international hotel chain, as have all the other
hotels on the island.
For the past few years, the hotel’s franchisee-owners
have been taking most of the profits for themselves and
putting relatively little back into the hotel. They’ve also
let you know that their business is not in good financial
health and that the revenue from the hotel is being
used to offset losses incurred elsewhere. In contrast,
most of the other hotels on the island have recently
been refurbished, and plans for two brand-new hotels
have been announced for the near future.
A team of executives from franchise headquarters
has just visited your hotel. They’re quite disappointed
in the property, particularly because it’s failed to keep
pace with other resorts on the island. They’ve informed
you that if the property isn’t brought up to standards,
the franchise agreement, which is up for review in a
year, will be revoked. You realize that this move
would be a potential disaster because you can ill afford
to lose the franchisor’s brand name, access to its reser-
vation system, or any other benefits of the franchise
arrangement.
Sitting alone in your office, you’ve identified several
seemingly viable courses of action:
1.
Convince the franchisee-owners to remodel the
hotel. You estimate that it will take $10 million
to meet the franchisor’s minimum standards and
another $15 million to bring the hotel up to the
standards of the island’s top resort.