Meriton Suites North Sydney has faced the issue of poor employee performance due to ineffective leadership. The SWOT framework has identified the challenges of the firm regarding leadership, and VRIO model has analysed those challenges effectively to make a recommendation based on contingency theory of leadership.
The organisation has to transform the transaction leadership style to transformational leadership style to gain expected performance from their employees.
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According to the Australian and New Zealand Standard Industrial Classification (ANZSIC) has defined the hospitality industry as the business that offers the facility of accommodation, restaurants, takeaway food services, taverns, bars, motels, and hotels. The tourism and hospitality industry is making a vital contribution in GDP of the country that is 3.2 % of total GDP of the country (Australia.gov.au, 2019).
The hospitality organisations like hotels in Australia are trying to enhance their business efficiency to operate their business effectively in growing market. In this report the strategic management issues that are related to leadership of the Meriton Suites North Sydney will analyse.
The following report will identify strategic management issues of Meriton Suites North Sydney with the help of the contingency theory of leadership. Meriton Suites North Sydney is one of the largest owner-operator hotel business that operates its business in 19th locations through 4945 rooms (Meriton Suites., 2019). The organisation has focused more on furnishing and design of its rooms to ensure good experience and comfort of their guests.
Meriton Suites North Sydney is the organisation that is facing the issue of the poor performance of employees in this recent time. The leadership process becomes the strategic management issue within the hotel as it has led to the issue of poor performance of employees. Meriton Suites North Sydney is using the leadership style that is not effective to motivate their employees towards good performance.
The SWOT framework will use to identify issues, VIRO theory will use to analyse challenges, and Fiedler’s Contingency Model will use to provide recommendation about identified challenges.
SWOT analysis to identify issues
SWOT framework will help to identify the strengths, weaknesses, opportunities, and threats of the business (Sarsby, 2016).
Based on the SWOT analysis the organisation has a vital weakness that is more focus on family values, as the Meriton is a family business and they have more focus on their family values, and they are not willing to change values according to the need of the market.
Poor employee performance and ineffective leadership in promoting creativity are also one of the weaknesses of the organisation. The organisation has strengths about operation in different locations with more than 4000 rooms so that effective presence across the country is one of the strength of the firm.
The hotel has strong financial health, as the sale of the organisation has increased by 8% consistently in past three years (Meriton Suites., 2019). The organisation has also expanded its business in global market that has increased revenue of the organisation effectively. However, the weakness of less effective leadership has made their strengths less effective to create competitive advantage.
The organisation also become less able to eliminate the threat of high level competition due to less innovative products and poor employee performance. Changing regulations about sustainability in tourism and hospitality business is also one of the threat for the business, as they do not want to make changes in their business practices based on their present leadership style. The organisation is also facing the strategic issue related to leadership style as the leadership style has reduced creativity within the firm.
VRIO Model to analyse the challenge
VRIO is the model that helps to evaluate resources of the organisation and competitive advantage based on resources. This model is the part of the resource based view that helps to identify the link between internal characteristics of the firm and their performance.
Valuable: Resources can be valuable for the organisation is the resources are effective to improve the efficiency of the firm and exploit opportunities and eliminate threats of the business (Hitt & Duane Ireland, 2017). The present resource of the organisation valuable as they have created effective marketing activities to increase awareness of people about the brand.
Strong brand image of the firm also valuable resource as it has maintained impressive market presence of the firm. However, the product range of the firm is not valuable resources to be competitive as they have less innovative food products than competitors like Hilton and Novotel. Employee performance is also not valuable resource as the organisation faced the issue of poor employee performance in this recent time.
Rear resources are those resources that can be acquired by only a few amounts of companies within an industry (Meyer, Neck, & Meeks, 2017). The brand image of the organisation is not rear as other competitors like Hilton and Novatel also has strong brand image within the market.
The product range of the organisation is also not rear, as most of the 5star hotels provide innovative food products to their customers. Skilled human resource also a valuable resource but not the rear one.
Imitability is the factors that identify those resources that are hard to imitate by other organisations. The product range of the organisation is easily imitable by the other organisations, as Meriton Suites North Sydney has less focus on innovative food products due to their present leadership style. The organisation also has less focus on creativity to innovate new services like ticket and travel booking service.
The product range of the organisation is not a valuable resource for the organisation, and this resource is not effective to gain competitive advantage for the business. The leadership style of the organisation is also one of the resource that has impacted negatively on competitive advantage, as the management has less focus on creativity due to transactional leadership style.
They have skilled human resource, but they have not focused on enhancing their expertise according to business environment, it has also brought challenge of poor performance that is related to the leadership of the firm.
At the end of the analysis, it can be said that Meriton Suites North Sydney has a weakness about poor employee performance due to rigid organisational culture and inflexible leadership. The organisation is also facing the issue in their resource, as they have lack of innovative food products to attract more customers towards the brand.
The resources of the organisation are not also inimitable by others so that the resources of the organisation has not provided competitive advantage to the business. The organisation is using transactional leadership style to operate the business based on their family values and does not want to change those values as per market needs, which is created the issue of less creativity within the firm.
Present Leadership Style:
The factor of present leadership has discussed which leadership style has been used within the organisation. The management thinks that it is more effective to hire skilled employees rather investing time and money to those employees who have poor performance. This concept of the organisation leads to the issue of skill shortage within the organisation. Therefore the company uses transactional leadership style.
The factor of leadership member relations will help to understand whether employees trust their leaders or not in Meriton Suites North Sydney. There is less trust among employees of the firm on their leaders as the leaders of the organisation has not to trust on skill of their employees. Less amount of training program and less communication with leaders have increased the issue of poor employee performance, as employees have less knowledge about how to achieve their individual goals, it is the evidence of unstructured task into the organisation.
The leaders also can reward and punish their subordinates as per their performance without seeking any approval from higher authority. Therefore, the factor of power and position is high under present leadership style of the firm.
Relationship between Leadership Style and Situation:
According to the above analysis about situational variables and the leadership style of Meriton Suites North Sydney, it can be said that the transactional leadership style has been adopted by the management to manage their employees. As the organisation has less focus on employee motivation and creativity of employees rather they like to work with rigid organisational culture.
The situational variables have revealed that the trust of employee among leaders is low, as the leaders do not support creativity of their employees, task structure also has identified as a structured task, and there is high power of leaders on their subordinates.
Therefore, the organisation needs to implement relationship-oriented leadership style that is transformational leadership style to eliminate their weakness about poor employee performance.
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