How Can Starwood Expand Their Business Into Russian Market in Specific Kazan?

¶ … Starwood hotel chain expand their business into Kazan market?

Kazan is one of the largest cities in the Republic of Tatarstan in Russia. With a populace of just one, 143, 546 recorded for the year 2010 in the earlier results of the national Census, it ranks as the eighth most populated city in Russia and was branded as the third capital of Russia in 2009. Subsequently, it has also been dubbed as the sports capital of the region. The importance of the city can be recognized from the recent level of importance it has been given by the Russian government as it continues to increase the economic strength, foreign investment and trade for the country.

As technology brings the planet closer together, more businesses have become multinational corporations (MNC) and have included in a method in their administrative policies to strengthen their market share and profits. The success to become a profitable MNC usually depends upon expatriates who are able to successfully implement the company's home strategies in the host country. Selecting employees willing and in a position to complete a global assignment efficiently is becoming vital to the success of numerous multinational businesses (Shaffer et al., 1999). Same is the case for Starwood looking to expand into Kazan. The two most important aspects that the expatriates will need to consider in this situation are the differing socio-cultural aspects of Kazan from other franchised markets as well as the flexible Strategic Human Resource Management (SHRM) and development policy that will be best suited for the region. Both these aspects will be discussed thoroughly later on.

Business leaders for Starwood enterprises all over the world are searching for methods to increase the amount of expatriates who complete international assignments successfully and stick with the organizational values following the completion to transfer knowledge and nurture a worldwide mind-set within the different franchises of the organization. Some businesses or franchises for Starwood have as many as 200 employees working abroad at a given time (Gregerson & Black, 1990). Based on Gregerson and Black, failures of those assignments range in expense from $55, 000 to $200, 000, necessary to replace one person, and expatriate assignment success rates are in times as little as 20%. A worst-case scenario predicated on Gregerson and Black's figures could imply that a business with 200 expatriates and an 80% failure rate may experience a loss between $11 million and $40 million largely because of poor choice of their expatriates. Based on most recent studies, proper choice of expatriates and their appropriate adjustment to the socio-cultural dynamics of the host country are paramount to successful completion of international assignments.

The objective of this paper is to analyze if there is any potential of Starwood hotel chain to expand their business into Kazan market. For this particular aspect, the paper will focus on, as aforementioned, the socio-cultural dynamics of the region as well as the appropriate SHRM policy. The paper's main focus will be on the data collection, analysis and interpretation of research findings which will, hence, make up a large portion of the paper.

Introduction

Businesses which have expatriate employees should regard successful completion of expatriate assignments as the main human resource mission and an integral aspect of the corporate strategy. You could barely imagine a business spending the amounts stated above on a bit of equipment that consistently does not meet expectations (Black, 1990). To improve the potency of the expatriate employees and also to ensure better performing multinational strategies, multinational businesses started to focus heavily on a variety and retention criteria of such employees as a strategic business goal in reaction to the increasing requirement for expatriates in MNCs. However, the criteria usually utilized by most businesses to pick expatriate employees are successful job performance in your home country, in addition to technical and managerial skills. If your candidate for an overseas assignment qualifies when it comes to technical skills, some businesses then search for personality and over all fit, which, based on Jassawalla, Truglia, and Garvey (2004), should be the primary aspect as opposed to the secondary one. Jassawalla and his colleagues asserted the fact that personality characteristics, including adaptability, should be studied first in potential expatriates, followed closely by an analysis of those candidates' technical skills. Jassawalla and colleagues futher declared that mostly businesses in the hospitality industry don't consider individuals lacking the capability to adapt cross-culturally. Likewise, based on a recent study, willingness to work overseas and past performance in U.S.-based jobs are poor indicators of an expatriate's potential success. Due to the fact somebody is really a high-performance employee in the U.S. doesn't imply that person is going to be equally successful abroad, just like the process of a brand new country also come with a brand new set of challenges and new beliefs -- expanding and franchising also brings forth a new set of corporate cultures and attitudes about getting work done (Jassawalla et al., 2004). Researchers similarly suggested that emotional intelligence assessments be utilized as an initial step to make sure the only the successful expatriates are hired and kept. Despite these findings, many firms continue steadily to focus their selection criteria first on technical skills and willingness to go abroad instead of considering the capability to adapt and emotional intelligence (EI), followed closely by sufficient technical skills (Shaffer et al., 1999).

The internationalization of the hospitality industry has put increased demands on all relative businesses on a global front as well (Gregerson & Black, 1990). Consequently, employees are now being hired and delivered to foreign countries to complete and attain more knowledge or information on missions, including turning around projects or groups, being subject material experts, guaranteeing that home country principles and policies are adhered to, attaining international experience to use in other structures (including succession planning), and much more. The successes of expatriates in attaining the aims of the organization have grown to be critical to multinational companies' international proposals (Lillis and Tain, 2009).

Based on Jassawalla et al. (2004), while there are lots of facets that influence the failure of expatriate assignments, none does occur as frequently as do poor cross-cultural adaptation or adjustment of the employee to the host country. Cross-cultural adjustment is understood to be a procedure of adapting to living and being employed in a foreign culture (Lee, 2006). It's the familiarity and psychological comfort an individual has with working and residing in a foreign country (Lee, 2006). Employees who neglect to adjust to the culture of the host country may leave the organization. At exactly the same time, many such employees stay and continue to perform below par for the rest of the international assignment (Gregerson & Black, 1990). Poor cross-cultural adjustment hampers the end result of the international assignment and increases the chance that expatriates won't accomplish their goals, leading to failure of the assignment (Gregerson & Black, 1990). Cross-cultural adjustment comprises three dimensions: general adjustment (culture), work adjustment, and interaction adjustment (Gregerson & Black, 1990). There are lots of definitions of what failure of an expatriate constitutes. Failure is actually a consequence of the expatriate leaving the assignment early, failing woefully to meet performance standards, or maybe not sticking with the organization following the expatriate assignment to transfer knowledge. Based on Lillis and Tain (2009), the major reason behind failure of expatriate assignments may be the inability of the employee to adjust to the host culture.

Based on Jassawalla et al. (2004), for Starwood, picking expatriates with high emotional intelligence can improve expatriate success rates in Kazan somewhat by shortening their learning curve and helping with faster cross-cultural adjustment to the host country. Because employees with higher degrees of emotional intelligence are faster and much more efficient in cross-cultural adjustment, they experience success as expatriates more regularly and quickly (Lillis & Tain, 2009).

Background of the Study

Socio-cultural adjustment - Examples

The standard view regarding international modification or adjustment was that it had been a unitary phenomenon (Gullahorn and Gullahorn, 1962; Oberg, 1960); however, this idea was opposed by Black et al. (1991) who claimed this concept is really multidimensional and had three different factors. The 3 dimensions of international expatriate adjustment were distinguished as: (1) general non-work environment; (2) interaction with the host nationals outside work, and (3) nature of the work. The socio-cultural features compromised in the international adjustment were one of the main theoretical frameworks as well. Various empirical studies have supported this three-dimensional framework of socio-cultural adjustment (Black and Gregersen, 1990, 1991a, 1991b; Black and Stephens, 1989; McEvoy and Parker, 1995).

Just a few empirical studies are available concerning the Western business expatriates' work adjustment in the mainland Asian regions, especially in Russia. For example, it's been discussed by Bjorkman and Schaap (1994) that there exist certain issues in the shape of the expatriates who're employed in Western-Asian or Western-Middle East joint ventures. Additionally they submit certain guidelines to handle the problem. Effective intercultural interaction in Asian-U.S. joint ventures is analyzed by Davidson (1987). Davidson (1987) figured both Asian and American board members should work in collaboration when operating the organization. Kaye and Taylor (1997) studied the expatriates have been used in Beijing's partnership hotels and found evidences of culture shock included in this, followed with a powerful inverse relationship between adjustment issues and inter-cultural sensitivity. Intercultural conflicts which are present in the bicultural teams in Russia-U.S. joint ventures were studied by Weldon and Jehn (1996), whereas, the management process for the development of British-Sino partnership was also evaluated by Rimington (1996). All the previously discussed findings were verified by Selmer (1998) (Selmer, 2004). Similar conditions should be expected to surface for western expatriate for Starwood when expanding to the Kazan region.

Other 2 dimensions of socio-cultural adjustment would be the general adjustment and interaction adjustment. With the duration of time, considerable research has been conducted in these dimensions too, which will be also apparent in the literature overview of sojourner adjustment (cf. Church, 1982). Nonetheless, business expatriates have already been studied specifically by just a few authors (Selmer, 2004).

US expatriate managers swelling in Korea have already been studied by Lee and Larwood (1983) when it comes to the cultural socialization. It had been ascertained that satisfaction at the office is increased once the host culture is adjusted. Mendenhall and Oddou (1985) laid increased exposure of the non-work roles' significance and stated that effective communication with the nationals of host country might help in gaining expatriate acculturation. Non-work socialization was recognized as problematic for the Swedish business expatriates employed in South East Asia, as identified by Selmer (1992a) and Selmer and de Leon (1989). It was since the cultural and language barriers were quite high, and simultaneously treated as those that had less significance in the bigger picture, which made the problem worse and led to low degrees of socialization (Selmer, 2004). All the aforementioned conditions is going to be commonplace in the order of Kazan, Russia as well when the Starwood expatriates try to expand to the regions so they have are expecting difficulties in not just adjusting to the neighborhood culture, society but additionally the language.

SHRM Development

Much of the empirical SHRM research published to date can be described as coupling (Webb, 1968; also see Wei and Lau, 2005), and while it is potentially useful, it is not as likely to lead to breakthrough insights. Coupling research involves extending previous work by (a) using a different subject population, (b) using a different operationalization of one or more variables, (c) including different levels of a variable than were studied previously, (d) simultaneously examining two variables that have in the past only been studied independently, (e) including potential mediating and moderator variables, or (f) extending previous work in a variety of other ways (Sackett & Larson, 1990). Coupling is useful early on when a domain is just beginning to become established, but the marginal contribution is reduced once a baseline of understanding has been reached. A potential danger of coupling research is that weaknesses inherent in earlier work may be perpetuated, a criticism that has been leveled at some of the SHRM research examining the relationship between HR systems and organizational performance. Additionally, Sackett and Larson quote McGuire (1979) in observing the tendency for seminal innovative research to degenerate over time into "baroque conceptual distinctions and arcane elaborations." To help prevent that fate, we offer the following directions for future SHRM research done on Starwood's penetration into the Kazan market.

Numerous researchers concur with other findings (e.g., Becker & Huselid, 2006), that more attention should be paid to implementation issues in SHRM development for Starwood, in particular issues of vertical and horizontal fit. We really don't know much about how organizations like Starwood go about articulating their strategies (e.g., Collis & Rukstad, 2008), and then fitting HR system components to these strategies. Kaplan and Norton (2004) have described a strategy mapping process that drills down to strategic job families, but leaves many loose ends on designing HR systems or specifying the HR architecture. And, while this prescriptive approach has appeal (i.e., it provides practical guidelines for implementation), little is known about its effectiveness or even use in SHRM. Even less is known about how to move in the opposite direction and convert HR capabilities into strategic competencies. A better understanding, through perhaps some qualitative research, of just how organizations link HR systems to strategies would be invaluable. Breakthroughs in this area likely will result from direct contact with organizations rather than studying existing literature. Contact with HR professionals also keeps the field of SHRM grounded and sensitive to the changing needs of practitioners (Cascio & Aguinis, 2008).

Another SHRM topic for Starwood when expanding into Kazan, Russia that deserves greater attention is corporate level strategy. Corporate level strategy refers to the overall strategy for a diversified company and is concerned with the mix of businesses the company should compete in, and the ways in which strategies of individual units should be coordinated and integrated. Business level strategy, on the other hand, refers to either the strategy of a single business firm or that of a strategic business unit within a diversified corporation. Virtually all of the research published to date has focused on business level strategy and SHRM. It makes sense to study the less complex phenomenon first, but the reality of many organizations today is that they pursue multiple strategies across multiple business units. How are the implications for SHRM of strategies, for Starwood in this case, related to diversification vs. non-related diversification? How can SHRM contribute to crafting the underlying commonalities that enable diversified firms to leverage their infrastructures and create synergies across customer demands and markets?

Research Design

There are two major aspects of this section of the paper; firstly the methodology which is used in performing this study course is presented, secondly, this section aims to answer the questions that justify the use of methodology. This section is further divided into the following segments;

1. Research plan;

2. Identification of Data and required sources;

3. Research Reliability and Validity;

4. Data Presentation and Research Findings; and,

5. Data Analysis.

The reason behind dividing the methodology in further eight segments is to focus on the challenges and problems, so that it will become more reasonable and practical. In addition to that, reason of this division is to make a conversion of major objectives of the research to the realistic and investigative issues (Cohen, Manion and Morrison, 2000).

Research plan

Research plan primarily refers to the philosophy on which the research is based and the research philosophy here comprises of identifying three philosophical priorities of the research: interpretive, positivist and realist, as explained by Saunders et al. (2003). In this research specifically, the sensitivity of the topic and its delicacy due to socio-cultural differences and political issues; we cannot develop a general conclusion, a general recommendation or design, or general law. The research, hence, will employ interpretive research philosophy rather than realist or positivist. Authors suggest that it is important that researchers need to get a firm grasp on the practical and ground realities about the subject they are researching i.e. Kazan hospitality and hotel industry to get a critical, narrow and focused solution to the addressed issue. In this study, the primary aim is to analyze if there is any potential of Starwood hotel chain to expand their business into Kazan market (Saunders et al., 2003).

Reliability and Validity of the results

Questionnaire measurement will be executed by using the same process for all the subjects, so dissimilarities amid responses can be ascribed to genuine dissimilarities in the studied sample. In this manner, dissimilarities in measures will not be ascribed to attributes of either the measuring-instrument or the measuring-process. To facilitate reduction in such measurement mistakes, the survey will be maximally standardized across all parts of the measurement procedure (Cohen, 2000).

The validity or authenticity of a research is what lies behind its success or failure. Even the slightest level of illegitimacy can make the entire research a drowned effort. For any form of qualitative data the authenticity lays in the integrity, depth and capacity of the data collected along with the targeted sample and the unbiased approach of the practitioner. In this study we used the survey method (semi-structured interviews and questionnaire) with the same procedure for everyone in the sample which ensured that the dissimilarities present in the responses are genuine and personal; hence the methodology will not be criticized in being subjective or inclined in any way (Trochim, 2001).

Data Presentation and Research Findings

Role, Cost and Management of Hospitality facilities

Maintenance

The organizational hierarchy and economic conditions directly impacts the roles and functions of business leaders for hospitality facilities. Therefore, it is imperative for the maintenance of top notch services that one reviews organizational structure in order to understand leadership traits and characteristics necessary to tackle the changes that surface when using the services of expatriates to expand into a different host country. Due to the constantly evolving economy, Starwood hospitality facilities are aiming to adopt a more elastic strategic management configuration so as to assist the maximization of the employee satisfaction and to get rid of any inflexibility in the organizational structures that obstruct communication and hinder the maintenance of steady costs. Project-based (or task-based) organizational compositions (PBO) facilitate the hospitality facilities to be more elastic as this employee structure comprises of transitory project teams and responsibilities which are softened after the necessary aims have been attained (DeFillippi & Arthur.1998: Hobday, 2000; Turner & Keegan, 2001).

Forster (2005) points out that this organizational maintenance structure of hospitality facilities became popular during the 1970's and continues to be popular today. He writes that the 1970's, "also marked the introduction of self-managing work and project teams, and the emergence of cross-functional work teams in many organizations (Forster, pg: 205)."

Emergency Maintenance

Strategic planning and purpose oriented communication is one of the core skills of Starwood business leaders today and is vital for the fulfillment of emergency maintenance strategies within the chosen region of Kazan. Task (or project) based organizational configuration lets the flexible capabilities of the personnel emerge who can react successfully to the changing surroundings and present their input with regards to development and implementation of company strategies. Facilities which are not prepared along such current approaches are also trying to integrate the utilization of the project based approach in emergencies. The higher administration in the home country controls those projects and offers help by giving expert counsel to teams (Forster, 2005).

Capital Expenditure Management

Project based approach is more common in those franchised organizations that have a matrix structure to maintain the capital expenditure, which is a cross of two organization types and can be applied by Starwood in Kazan as well. Generally, a matrix structure consists of a cross between permanent departments, usually functional, and temporary project teams. According to Larson and Gobeli (1987), there are three types of matrix organization for capital expenditure management: the functional matrix, the balanced matrix and the project matrix. Functional matrix is when the project teams have to report to the functional managers who have authority over the capital allocation and asset management teams. A balanced matrix is characterized by a sharing of responsibility and authority between the project managers and the functional managers for capital distribution. Project matrix is when the project manager has control over the project's capital and intangible resources and is not a subordinate of the functional managers. In all the three cases, business leaders have go to make wise decisions, manage change, as well as, motivate themselves and others.

Responsibilities of Facilities Management

Service

Perhaps the most interesting methodology employed by Starwood facilities management teams is their blind trust in the employees to check their own work as well as the inventory records. They further rely on the employees for quality control without having a proper facility management structure employed. While this seems to be working for them right now, it is not the smartest idea to continue with this line of work in the future. The fact of the matter is that warehouse management is perhaps the aspect of administration that can make or break the success of a product within a market structure. Facilities need to be performing at the highest level all day and all year for the production and distribution process to fulfill their duties as well.

For Starwood hospitality facilities managers who are working within the ever changing and speedy companies and industries that include domains like consumer care/services, the main responsibility is to make sure that the purchase and delivery structures are timely but also that the products bought and sold are in prime condition. This maintenance of prime condition of furniture products is what facilities management is all about for hospitality organizations and it cannot be sustained without a proper administrative structure to oversee it. Another important aspect of facilities service management is that the regulations, local and international, are followed to the dot in the maintenance of all products. The slightest evidence of misconduct in facilities service management can be disastrous for any company, big or small. Hence, one of the most popular methodologies for facilities service management at Starwood includes the complete visibility of all strategies and activities implemented within the facility. This includes complete visibility and details of the workers employed, the equipments and mechanisms used as well as the total area and condition of the atmosphere within the facility as well as the conditions of the transport vehicles used amongst other aspects (Chen and Elke, 2005). For hospitality facilities, this aspect also includes how, with the global community being more aware of the environmental breakdowns in recent years, they react and present clarity on all resources used and how they give back to the environment.

Asset Management

The main focus of most of the Starwood asset management structures includes lucid communication structures between the manufacturers and the supply chain partners. This lucid network of communication allows the involved parties to coordinate and integrate all functions. This further helps in increasing the overall efficiency of the company to respond and tackle the consumer needs and requirements, even if they are unforeseen. This particular strategy also helps companies increase and optimize product placement and distribution policies, designate and prioritize responsibilities across the entire business structure, apply just productivity principles, and augment overall logistics performance and competence (Zhou et al., 2007). This particular aspect should not be too hard for hospitality facilities to adopt. This is so, because the current structures at most hospitality facilities are completely dependent upon communication and coordination between different departments and sectors.

A bridge to competitiveness in asset management in Starwood hospitality facilities in Kazan requires people who, not just be hired and trained simply for the work their hands can do, but at the same time should also be judged for having the ability to think and learn and make a difference as the asset managers. Thus, successful asset management strategy for most hospitality facilities will also include building a learning workforce where the managers develop a great working environment and a culture of empowerment. To understand how successful global facilities administrators manage their employees and became the catalyst to competitive success, many researchers have done a multi-method research analysis that was a combination of both secondary and primary research techniques over the years (Chen, Chen, Zhang and Elke, 2004).

The researches thus concluded with the following findings that could prove to be successful strategies for hospitality facilities to employ in the future. They revealed that the characteristics of a good working environment in these winning facilities: compensation that convey that employees truly are valued, exceptional facilities, a facilitative company culture, good relations between management and employees, a flexible work place, a family-friendly culture, and investments in employee competencies (Chen, Chen, Zhang and Elke, 2004).

Data Analysis

Quantitative Analysis (Questionnaire)

In statistical data analysis, tool to measure correlation between the (research) variables is called regression. In other words, regression is a tool to figure out effect of one variable with respect to the other. Regression analysis is hence employed to understand dependency of variables and relativity, hence determining the relationship significance. For instance, relationship between actual relationship and researched variable called approximated relationship, will allow us to capture subjects' perceptions.

Qualitative Analysis (Interviews)

Qualitative data collection is not done in the same standard fashion as the quantitative data collection. It requires sectioning and classification of the research subjects or units of research to be effectively analyzed. Nonetheless, there are a number of literature on strategies and customs of managing and collecting the data (Saunders et al., 2003). In this study, the selection of methods and strategies is based on the design of predefined speculations and hypothesis. Following are the standards for this research determining the conceptual framework: 1) Aims, orientation and objectives; 2) standardized conclusions from case studies related to the subject matter (Yin 1994). To rack the data into efficient form and making it ready to be efficiently analyzed, the data and information collected will be sectioned and aligned according to the classifications done in the literature review encompassing all the aspects of research (Saunders et al., 2003).

Discussion of research findings

Management of Starwood Hospitality Facilities

Perhaps the most important service that Starwood hospitality services provide is the comfort and ease of the rooms to the clients. This maintenance of prime condition of furniture products, internet services and the general layout of the room is what facilities management is all about for hospitality organizations and it cannot be sustained without a proper administrative structure to oversee it. Another important aspect of Starwood facilities service management is that the room's structure in one that is welcoming and warm. For this particular innovative approach to design better rooms the idea is to keep it simple and chic with a square structure (see appendix) divided equally in four perfect squares: one for a makeshift office, one for a lounge plus kitchen, one for a bedroom and one right at the entry way with a proper sitting arrangement for the guests. Currently most hospitality rooms don't have separated sections, rather one big room with all of the necessary equipments divided across walls. This arrangement will give a more homely feel and will allow the guests to divide their work and leisure activities without having to cause any discomfort to their roommates i.e. anyone who wants to work late can do without having to work in the dark with the light off because their roommate wants to sleep early, he/she can simply work in a different room (Forster, 2005).

Similarly the lobby and ground floor structure of the Starwood hospitality facilities must be such that it remains open to natural light and has at least major stairwells, escalators and elevators that open onto the main reception (see appendix). Apart from this, the lobby must be connected yet distanced from the outdoor sitting area i.e. The garden so that it appears to be and is perceived to be a different environment all together. Furthermore, the lobby should be directly connected to the main entrance and the main reception so that the waiting guests can hone in on the ambience of the hotel. Hence, the interior design of the lobby takes top priority as that will set the expectation that the customer or guest will have from the facility (see appendix) (Hobday, 2000). To boost the first impression of a guest waiting in the lobby, it would also be feasible to have separate areas for internet use, the hospitality employee office areas, the food corner, amongst others; all separated cleverly with creative designs instead of walls and generic room separators (Turner et al., 2001).

Furthermore, it is also important that the Starwood hospitality facility in Kazan is visible from the main road yet does not have the unnecessary noise that comes along with being on the main road; hence the name must be lifted high over the structure with a direct road leading to the facility but one that curves enough and is long enough to separate the facility from the disadvantages that come with heavy traffic on the main road. This can be done by placing the main entry road in between gardens along visual designs that attract attention from the guests and allow them to spend time out there as well (Turner et al., 2001).

Also, the overall structure of the mezzanine and first floor could have natural light and an open structure as well (see appendix) to give the guests an elevated view of the overall grounds form the 360 degree angle. Furthermore, the parking lot structure will also be one that is very open and spacious (see appendix) so as to allow 24/7 parking facilities; the parking lot will also be floored extensively underground as well as above ground -- with above grounds flooded with natural light and ventilation and underground floors being temperature-controlled and appropriately lit (Hobday, 2000).