Investigating the Centric Profile of International HotelGroups:

A Pilot Case Study

Abstract

The applicability of the ‘geocentric approach’ to global firms is a current debate amongst both practitioners and academics. This paper reports on an inter-disciplinary research project that aims to assess how far a global/local perspective is being utilised by international hotel groups and the impact this has on thegroups’ performance. A research instrument has been developed to assess the ‘centric profile’ or dominant attitude of international hotel groups to foreign cultures. The findings of a pilot case study of one international hotel group are reported and analysed, together with recommendations for refinements to the research instrument.

Key words: international hotel groups, management orientation, global/local perspective, centric profile, geocentricity

1

Dr Angela RoperOxford Brookes University, Oxford, UK

ajr@hrm.brookes.ac.uk

Maureen Brookes Oxford Brookes University, Oxford, UK

meab@hrm.brookes.ac.uk

Anne HamptonUniversity of Buckingham, Buckingham, UK

anne.hampton@buck.ac.uk

2

Investigating the Centric Profile of International HotelGroups:

A Pilot Case Study

Introduction

Most international hotel groups are striving to achieve

and sustain global competitive advantage. One of the

factors that has been identified as having an influence

on performance in the global marketplace is management

orientation towards international business or

‘centricity’.

This paper reports on the pilot stage of an inter-

disciplinary research project which aims to investigate

the centric profile or management orientation of a sample

of the most international hotel groups in order to

evaluate the causal impact of centricity (see Roper,

Brookes, Price and Hampton, 1997; Burgess, Hampton, Price

and Roper, 1995). The applicability of the ‘geocentric

approach’ to global firms is a current debate amongst

both practitioners and academics. This paper begins by

exploring the concept of centricity and the value of

3

using this issue as a means of investigating the

management of international hotel groups. The paper then

discusses the development of an appropriate research

methodology and framework to investigate decision-making

processes at corporate level. The findings and analysis

of a pilot case study, investigating one international

hotel group, are presented and analysed. The paper

concludes by reflecting on the research methodology and

instrument utilised and discusses the next stage of the

research project.

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The Concept Of Centricity

Perlmutter (1969), the most widely quoted author on the

subject of centricity as related to the management of

international firms, first defined multinationality in

terms of managers’ ‘mind sets’. He believed that:

‘the more one penetrates into the living reality of an international firm, the

more one finds it is necessary to give serious weight to the way executives

think about doing business around the world.’ (p 11)

Perlmutter identified four approaches to international

management: ethnocentric [home-country oriented]; polycentric

[host country-oriented]; regiocentric [regionally-oriented]; and

geocentric [world-oriented]. An ethnocentric firm views the

business from the perspective and values of the home

country. Policies and practices are likely to be

designed by home-country nationals with little or no

variation for international operations. A polycentric

firm operates according to the principle that each

country of operation is different. Whilst retaining

loyalty towards the home country, it allows for the

appointment and development of local people for key

5

positions in the host country. Set against this however,

there are few opportunities for host-country staff to

move overseas or progress to headquarters posts. The

geocentric approach recognises both similarities and

differences in cultures and markets. It purports to

value and integrate cultural diversity within the

corporate decision-making process and balance the needs

of corporate headquarters with those of local units.

Best practices are adopted on a global basis and adapted

for local conditions where necessary, an approach easily

sloganised into ‘think global, act local’. The

regiocentric approach is essentially a variation of

geocentricity but on a regional basis.

Perlmutter also stated that it was the adoption of a

global habit of mind that distinguishes the geocentric

company from the ethnocentric and polycentric firm.

Other researchers such as Roth, Schweiger and Morrison

(1991) Leong and Tan (1993) and Calof and Beamish (1994)

have all utilised the concept of ‘mind sets’ to

investigate the behavioural aspects of management. Calof

and Beamish (1994) believed that the impact of attitudes

6

on performance is so great that they asked senior

executives how they thought critical international

decisions should be made based on the premise that

‘everyone has a centric profile - or dominant attitude -

toward foreign cultures’ (p 105). This focus on managers

has meant that the concept of centricity has generally

been used to categorise the human resource strategies of

multinational firms by many textbooks on international

management (see for example Hodgetts and Luthans, 1997;

Deretsky, 1994; Dowling, Schuler and Welch, 1994). It

has also been used to inform research methodologies

adopted to explore the human resource policies of

multinational companies (MNCs), see for example Kopp

(1994) and Banai (1992).

The Extended Concept of Centricity

Alternative perspectives of centricity also exist.

Heenan and Perlmutter (1979) used the same centric

terminology to describe distinct strategic

predispositions in multinationals. This type of

predisposition shapes the company’s mission, governance

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structure, strategy, organisation structure and

organisational culture. It also dictates the firm’s

behaviour in a variety of functions (Chakravarthy and

Perlmutter, 1985). It was this predisposition, as seen

through the practice and the existence of certain

arrangements and institutions, that Edwards, Armstrong,

Marginson and Purcell (1996) set out to investigate in

multinational firms. Thus, multinationality has also

been defined strategically. Bartlett and Ghoshal (1989)

identified multinational strategy as being a continuum

from firms at one end whose strategy is multidomestic to

those firms at the other end who are integrated

transnationally. They purported that the ‘transnational

solution’ is the best structural form for handling the

complexity of global markets. Similarly, previous

researchers (such as Ferner, 1994 and Malnight, 1995)

have likened the transnational firm to the geocentric

firm.

The Applied Concept Of Centricity

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Thus, the geocentric organisation has been heralded as

the ‘ideal’ approach within many industries including the

international hotel industry. This axiom is perhaps most

obvious in terms of hotel groups’ mission statements and

their promotional and publicity material. For example,

Inter-Continental Hotels and Resorts claimed that its

hotel management teams deliver:

‘a product consistent with standards which evolved for the entire group,

but which wherever possible were enhanced to emphasise the local culture

and assure competitive leadership in the local marketplace.’

(Potter, 1996, p 233)

The ‘think global-act local’ dilemma was further enhanced

by Bryan Langton of Holiday Inns Worldwide:

‘Uniformity in customer service, quality and value need not ignore the unique

local character. Individual franchisees and general managers can offer

additional services that uniquely meet the needs oftheir markets and

guests...the key to success is getting the balance right.’ (Langton, 1995, p 16)

and by Jay Witzel, President and Chief Operating Officer

of Radisson Hospitality Worldwide who claimed that:

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‘Our level of sophistication and competence is unequalled because

we combine the experience and savvy of the local hotel company

with the global brand marketing power and business delivery systems

provided by Radisson.’ (Witzel, 1997)

However these statements of a geocentric philosophy or

mission may or may not be implicit in corporate strategy

and, more importantly, may or may not be found in the

implementation of strategy and operational practice.

Furthermore, research has shown that seldom are any of

the centric approaches found in their pure form.

Chakravarthy and Perlmutter (1985) preferred to identify

an organisation’s predominant strategic predisposition

and entitle this its ‘EPRG profile’ (standing for

ethnocentric, polycentric, regiocentric and geocentric

predispositions). Levels of centricity vary particularly

across functional policies and procedures and, according

to Malnight (1995), at any given time the level of

centricity within each business function can be

different. In addition, there is evidence that the level

of centricity is variable. For example, Wind, Douglas

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and Perlmutter (1973) found significant differences

within the centric approach in the marketing function

among different types of marketing decisions. In order

to evaluate a MNC’s centric orientation it is therefore

necessary to exaime each seprart functional area.

Table 1 depicts the functional approach under the

different centric orientations.

- Insert Table 1 here -

The evaluation of an MNCs’ approach to functional areas

demonstrates the complexity of centricity within an

organisation, as well as highlighting the likelihood of

centric variation both within and between functional

areas. Thus, we see that although it has been suggested

by Calof and Beamish (1994) that a geocentric orientation

may offer the best approach to international management,

it would appear that it is unlikely to be found in its

pure form within one organisation. When this is linked

with the fact that mission statements and promotion of

organisational philosophy may not be illustrated in

11

operational practice, the complexity of investigating the

centric orientation of a firm is demonstrated. The

early stages of this research have therefore been focused

upon developing a research instrument to assess the

‘centric profile’ or dominant attitude of international

hotel groups to foreign cultures and to determine whether

geocentricity is really an ideal approach for these types

of firms. As much of the research to date has

investigated centricity within a single discipline in

non-industry specific firms, this research aims to

investigate centricity from an inter-disciplinary

perspective and within the context of the international

hotel industry. The very nature of the development and

operation of hotel groups leads one to question whether

the findings may be dissimilar to previous research. The

specific stages of the research methodology are detailed

in the following section.

Methodology

Stage 1. Identification Of The Sample Frame

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In order to construct an appropriate sample frame,

international hotel groups were defined as those firms

with direct ownership or other contractual arrangements

in a minimum number of six countries. Through secondary

sources, such as the Top 200 Hotel Groups Survey

published by Hotels magazine (1994), The AH&MA Directory

of Hotel and Motel Companies (1994), articles in the

financial and international press, and company

publications, an initial list of 37 hotel groups was

compiled. An internationalisation index was then applied

to these hotel groups by calculating the number of

bedrooms that a group has outside its home country and

multiplying this by the number of countries in which the

group has a presence.

It is clear that with the speed of change in the

portfolios of international hotel groups, the index of

internationalisation is only relevant as a snapshot in

time. Since the determination of these indexes many of

these groups have changed substantially, however, they

would all still be included amongst the most

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international. Another limitation of the use of this

index as a relative measure of internationalisation is

that it is to some extent biased to the size of firms.

The calculation of the percentage of foreign bedrooms

figure is undoubtedly one reason why Holiday Inns comes

out as the leading firm. The company was previously

owned and had dominance in its ‘domestic’ market of the

USA prior to its purchase by Bass plc. Therefore, this

company’s base in the UK now means that its number of

international rooms is very large, particularly when

considering its presence in the American market.

However, by utilising the internationalisation index, a

research sample has been obtained that measures the

extent of internationalisation and includes organisations

which not only originate from diverse national cultures

but which are also headquartered in different countries.

Nationality has been postulated to be an important

determinant of the adopted management approach.

Table 2 illustrates the twelve hotel groups with the

highest internationalisation index from the original

sample frame.

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- Insert Table 2 here -

Stage 2: Design Of A Research Instrument

Drawing upon the different knowledge, expertise and

viewpoints of the inter-disciplinary team, a research

instrument was designed to determine the centric profile

of the sample of international hotel groups. In

particular, the instrument was designed to investigate

the internal decision-making processes and the dynamics

of these within each sample organisation through a series

of semi-structured interviews. In the initial stages of

research the interviews were held at corporate level.

As centricity has been shown to vary across management

functions, specific frameworks for the functional areas

of strategic planning and marketing, human resource and

financial management were designed. As previous research

has also indicated that centricity can vary within

functional areas depending on the type of decision being

made, a series of objectives were set for each functional

area. In order to achieve each objective a set of

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questions was formulated and a further framework

developed for analysing the response to these questions.

There were some objectives that were similar across all

four functional areas including determining the

organisation and administration of the function, the

process for strategy formulation, flows of communication,

and processes of budget setting and performance

measurement. For these objectives the research sought to

determine how the function was organised on an

international basis, the nationalities and locations of

key decision-makers, and where and by whom the strategy

was formulated. Investigation was also made into the

purpose, frequency and direction of communication within

each functional area. There were also specific

objectives set for each functional area which sought to

investigate practices and procedures unique to each

function such as those illustrated in Table 3.

Stage 3. Fieldwork.

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The next stage of the research involved the selection of

one hotel group from the sample for a pilot study in

order to test the appropriateness and applicability of

the research instrument. Access was negotiated with the

pilot organisation, and with confidentiality guaranteed

appropriate key corporate personnel to interview were

identified. Each interview was conducted by two members

of the research team. The discussion was tape recorded

and a typed transcript subsequently produced. In

addition, immediately following each interview, the

researchers individually wrote up contact summary sheets

that included salient points about both the interview

process and findings.

Stage 4 Analysis of Research Findings

The transcribed interviews were then analysed by two

members of the research team using a pre-formulated

framework for each function. These frameworks consisted

of appropriate responses to each particular question from

each centric perspective. The analysis of the pilot

hotel group is presented in the following section.

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Findings

The hotel group piloted for this study has undergone a

great deal of change over the past few years and key

decision-makers have all taken up their corporate

positions during this dynamic period in the company’s

history. Therefore, a strong team spirit prevails

amongst these executive officers. The home country is

described as the ‘engine room’ and the company’s Board of

Directors is completely comprised of home country

individuals. The company’s language and national culture

originates from these stakeholders and there is little

sign of there being any change to this pattern in the

near future. The findings from a range of interviews

with corporate executives from the functional areas of

strategic planning and marketing, human resource and

financial management are summarised below.

Strategy And Structure Of The Hotel Group

The mission for the group is most definitely one of

viability and the strategic process involves identifying

18

the most profitable components within the organisation

and embarking upon a divestment and consolidation

programme. The company is organised on a geographical

basis with a number of divisions that are representative

of the countries of operation. Divisional managing

directors, whilst not represented at Board-level, are

characteristic of the home country and are as such

described as ‘our own guys’. Divisions all utilise the

same strategic planning framework, devised by head

office. However, the divisions are not ‘railroaded’ into

something that is head office driven and corporate

executives make sure that they receive ideas from each

division because ‘it is terribly important that there is

a sense of ownership in the field coming through this

[strategic] process’. Therefore, the resulting strategic

plans from each country of operation take into account

local operating conditions and local/ national market

demands. They are not however brought together and there

is little pooling of strategic planning ideas and

resources amongst subsidiaries. The reason given for

19

this lack of dissemination is because the company is

finance - rather than just business - driven.

The hierarchical regional divisions are given a

relatively great deal of autonomy. They are not

competitive nor incentivised based upon the performance

of the whole group. Most communication is intra-

subsidiary (between department managers in the same

subsidiary), however, it is obvious from the strategic

planning process that interaction also does takes place

between subsidiaries and head office (which tends to

advise and command divisions).

Executives at divisional level below the managing

director are all culturally diverse and they have their

own strengths and ‘fiefdoms’. The hotel company is

therefore not so home-country oriented in terms of

implementation and day-to-day operational decision-

making; there is a local/national flavour to how it

actually operates in each different country. The company

builds a strong local presence through sensitivity and

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responsiveness to differences in national environments

around the world.

There are examples of some knowledge and expertise being

transferred throughout the group via the catalyst, the

Chief Operating Officer, and via intermittent meetings

between functional representatives from the operating

divisions. Overall, this autonomous divisional structure

tends to lead to the development of new products and

processes locally, in response to local circumstances.

Capabilities are only developed at divisional level and

do not rely upon the expertise of other divisions. As

one Managing Director commented, ‘I can chat to my

colleagues [overseas] ...but it is not going to

materially affect the way I do business’, therefore,

there is obvious duplication of effort and no real sense

of a ‘group’.

Financial Management in the hotel group

Key financial decision-makers are based in the home

country, although they do not all originate from this

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national background. At divisional headquarters there

are financial directors and controllers who originate

from both the home and host countries, resulting in a

culturally diverse mix of financial managers. The

company is however only listed on the home-country stock

market. Financial strategy and the establishment of

targets and performance measures are all devised and

established at the headquarters of the organisation.

Agreements on capital expenditure by any of the divisions

must also be sought at this level. However, the actual

interpretation and then implementation of head-office

financial strategies are left up to divisional finance

directors. Procedural decisions are therefore made at

the host-country level. External reporting systems are

also in line with divisional country legislation.

Contrary to such local autonomy, the company has recently

installed a uniform system of accounts throughout the

organisation. Although it was reported that there had

been consultation at the development stage (predominantly

via a working party) the actual decision to implement the

22

standardised system had been initiated by home-country

executives. Communication is largely infrequent across

all divisions, although meetings are arranged on an

irregular basis when specific project tasks form the

basis of discussion. Outside of these meetings

communication is mainly informal. Although there is

minimal feedback on the performance of other divisions

via head office, it is at the discretion of individual

managers.

Financial management within the company appears to

display quite a wide centric dichotomy. On the one hand

decision-making processes are deliberately ethnocentric

whilst, on the other hand, the differing environmental

factors experienced at divisional levels have resulted in

the adaptation of the accounting function to host-country

conditions. Overall, there is a resulting display of

polycentric tendencies. It is not surprising that in

terms of financial strategy the company is more concerned

with the home-country operation as a result of its larger

contribution to both revenue and profitability overall.

23

Whilst overseas divisions provide just over one half of

revenue, the home-country division accounts for over two-

thirds of GOP. Therefore, the central role that the

home-country division occupies within the organisation

may not mean so much that the company is ethnocentric but

more that this is, as respondents have commented upon,

the ‘dominant partner’.

Marketing Management In The Hotel Group

Marketing is organised on a geographical basis with a

number of divisions that are representative of the

countries of operation. The marketing and sales directors

in each division originate from these host country

regions. Strategically, marketing objectives are

formulated and budgets determined from local

perspectives. Communication on the whole is infrequent

and informal between each country of operation. However,

it emerged that occasional scheduled meetings do take

place between divisions for the purpose of sharing ideas

and practices and that the agenda for these meetings is

chosen by each regional division on a rolling basis.

24

Regardless of this rotating agenda, the chair of the

meetings is usually representative of the home country,

the justification being that ‘the home country is the

dominant partner, has got the most customers, the most

hotels and has a higher profile with agents’ (Marketing

and Sales respondent).

The marketing strategy for each division is therefore

devised for local markets and is based upon performance

measures benchmarked against local competition and market

conditions. Although the target markets for each

division are predominantly domestic (in each division

only one in ten customers originate from overseas

markets), some attempt has been made to identify examples

of corporate businesses that have subsidiaries in

complimentary locations. Additionally there is evidence

of shared activities such as promotional agreements with

third party companies and trade exhibitions. One example

of such collaboration is a company-wide advertising

campaign which directs the national leisure market in

25

each division to sister properties in international

locations.

As target markets are predominantly domestic, the

company’s mid-market products and brands are developed at

the local level with little standardisation between the

countries of operation. Separate brand identities are

considered advantageous because each brand has high local

brand awareness and recognition. Prices are also largely

determined at local level. Although it is recognised

that one central reservation system would be beneficial

for the distribution of hotel brands, there are at

present separate reservation systems in each country of

operation.

Overall the firm’s marketing activities reflect host-

country oriented needs and conditions. Marketing

strategies are developed to suit the local economy.

Expansion to new markets is determined by the needs of

the host country and there is minimal product

standardisation across the countries of operation. The

26

approach could thus be described as predominantly

polycentric, however, there are hints of other centric

approaches within the marketing function. The

significance of the home-country operation in the total

portfolio, to some extent leads to ethnocentric

tendencies. The communication between divisions, although

limited, also reflects an attempt to share information

across the divisions. If this practice develops further

then there could be potential for a more global approach

to marketing activities.

Human Resource Management In The Hotel Group

The firm does not employ a group human resource director

as the function is organised based upon each specific

country of operation (not dissimilar to the marketing

function). However, the home-country human resource

director does, to some degree, act as the unpaid group

director. The reasons for this are possibly due to the

personality and ambition of this individual to take up

(if available) this broader role. However, a recurring

27

reason given as to why this director had a more dominant

role in this function is summed up as follows:

‘we [the home country] are the largest bit and we are the most profitable bit.

I suppose those are some of the reasons why you would do it from [here] ....

That is where the scene of our front team is.’

However, in reality the separate countries of operation

really manage human resources autonomously and different

human resource strategies are devised by host-country

nationals for operation in their specific operating

environments. The influence of national laws and

legislation has resulted in country-specific approaches

to the management of people. Due to the change in

managing directors mentioned above, the finalisation of

strategic planning documents are overseen and agreed by

these regional managing directors who reflect home-

country origins and/or ways of doing business (for

example, the achievement of payroll percentages to budget

are used as a performance measure of employee

resourcing). The lack of a co-ordinated human resource

function was further evidenced by the fact that the

28

company collects no data on employee resourcing across

each of its divisions.

All general and departmental managers are host-country

nationals. Country-specific management development

programmes are therefore devised and attributes of

general managers are determined by each country of

operation. Training/personnel manuals are also developed

in country, for country only use. Few opportunities

therefore exist for locals to apply for posts outside of

their country of origin.

Although one example was given of a cross-national

movement of a group of managers, generally the human

resource respondent felt that there was a lack of trust

and reliability in the transferability of individuals

across the company. There was an underlying belief that

it was not the ‘best’ individuals who were being selected

for transfer. It was claimed that there is a move

towards more common group strategies and policies.

29

However, in the course of the interview no real concrete

evidence was discovered of such a change in practice.

Meetings are held across the divisions at this functional

level, for example, gatherings are arranged several times

a year for comparative purposes. Common agenda items are

agreed in advance by each party; although these meetings

have only an influential rather than decision-making

role. For example, ideas on motivation have been shared

in the past but in the end practices were left to the

discretion of individual countries. As a result,

consultation across divisions appeared to be mainly

through this limited medium.

The company, therefore, appears to be ethnocentric in the

way that it recruits executives to key decision-making

positions. Individuals either originating from or

reflecting the home country are recruited and developed

to core positions world-wide. The result is a strong

corporate culture and a certain ‘tightness’ and cohesion’

at the very top of the firm. The importance of the home

30

country’s high profitability standing was once again

mentioned by respondents in this function.

Interestingly, further down in the organisation, below

country managing director-level, local staff are employed

on local terms and conditions. They are given a great

deal of autonomy and local opportunities are evident for

promotion. At this operating level there are very few

company-wide policies or any standardised human resource

performance measures and as a result there is little

opportunity for local/national staff to move overseas or

to progress to headquarter’s (located in the home

country) positions. These findings point to a

polycentric management orientation.

In terms of human resource management there is clearly

some dichotomy in management approach, the executive

summed this up well by stating that one’s instinct would

be to leave it local in order to recognise local

conditions, however, it was important to appoint a Chief

Executive or divisional head who is ‘your man’.

31

Discussion

The strategic and structural components of this

international hotel group display signs of being

ethnocentric. For example, home-country people are in

charge of the company at the boardroom level and

recruited into key executive posts are individuals who

are found to possess similar national cultural

characteristics (irrelevant of their origin). The

economic position of the company may provide the true

reason for such executive posts and for the financial

strategy still being devised in the home country. The

company is dominated by its home-country culture and we

were told by several respondents that this is unlikely to

change in the future.

Although ‘our guys’ are the managing directors at

divisional headquarters, competitiveness is achieved by

building a strong local presence through sensitivity and

responsiveness to national differences among countries.

The fact that the company targets predominantly domestic

markets in each of its operating divisions serves to

32

justify this multi-domestic or polycentric source of global

competitiveness. The local recruitment of hotel managers

and staff similarly serves to perpetuate this host-

country orientation. However, respondents in different

functions pointed to the adverse affect of the loyalty of

the firm’s employees to their country of origin as

opposed to the corporation as a whole. The accounting

function is also locally adapted in order to meet

wherever possible specific host-country legal and

operational conditions. This adaptation reflects the

views of many authors writing on international commerce

who state that major obstacles are brought about by the

internationalisation of accounting. In the marketing,

human resource and finance functions there is little

transference of knowledge and expertise across divisions

and minimal co-operation between subsidiaries. Overall,

this polycentric approach leads to duplication of effort

and the tendency to sacrifice global (or more

appropriately for this company, regional) competitive

sources of advantage.

33

This case study does illustrate the point made by

Chakravarthy and Perlmutter (1985) that the market scope

(broad or narrow target segments and global or local

customers) of the multinational firm may also be a

component affecting the most appropriate management

approach. A polycentric, multi-domestic approach appears

most suitable in this hotel group where customer needs

are locally specific and where they relate to mid-market

brands with local brand awareness.

The evaluation of this international company’s approach

to functional areas demonstrates the complexity of

centricity within one organisation as well as

highlighting the reasons why it is unlikely that one

organisation would have a totally dominant centric

predisposition. A mixture of ethno- and polycentric

management approaches within and between functional

areas are evident in this pilot firm, rather than one,

homogeneous centric orientation. This mix of approaches

may also be reflective of the relatively lower

significance of the company’s overseas division in terms

34

of their contribution to profits and of the company’s

comparatively short time operating internationally (it

only added overseas units to its portfolio of activities

just over one decade ago). This latter point supports

the work of author’s such as Caproni, Lenwat and Murtha

(1992), Banai (1992) and Malnight (1995) who have all

associated centrism with stages of internationalisation.

However, the firms divestment programme will probably

redress the balance of its portfolio so that it is less

heavily-weighted to units in its home country and more

international (i.e., resulting in a higher

internationalisation index). In addition, discussions

with the Board member respondent also indicate that the

firm is now at the stage in its development where it is

ready to consider its whole international strategy and

approach to managing units overseas. Therefore, for this

firm the centricity construct may be viewed as an

evolutionary theory of internationalisation in which a

geocentrically-oriented approach represents the most

advanced organisational form. The most senior executive

35

interviewed professed dissatisfaction with the loss of

potential learning and synergy resulting from this

particular management orientation. In fact this

respondent and executives particularly in marketing and

finance all commented upon their wish for the company to

be able to take more advantage of the transferability of

knowledge and expertise throughout the organisation in

the future. If the firm took a geocentric approach to

marketing it would develop products, pricing and

marketing communications for global use with local

adaptations to suit particular markets where necessary.

This approach may be worthwhile considering the company’s

involvement primarily in the middle of the hotel market

where value is added upstream. The creation of an

executive operating committee comprising divisional

managers was forwarded as a possible future structural

solution to achieving a more geocentric approach, where

objective setting and strategy formulation would take

place on a global basis with loyalty to the firm. It was

also believed that if the performance of divisions could

be assessed comparatively this would be advantageous. In

36

implementing such a different approach one large obstacle

would have to be overcome - that of the likely negative

reaction of managers (with their personal ‘fiefdoms’) and

staff to the dismantlement of the high autonomy presently

enjoyed by each geographical division. Such a move could

be viewed as bureaucratic and ethnocentric if not

implemented thoughtfully.

The link between performance and centricity remains

difficult to untangle in an organisation such as this

where its problems in the past have meant a more short-

term and contingency approach to the way that it manages

internationally. However, in a period of obvious

consolidation the company is now just beginning to

identify a longer-term international management strategy.

Respondents point to elements of the transnational or

geocentric form as a possible way of overcoming the

disadvantages of a mixture of multi-domestic and home-

country oriented approaches, although it is too soon to

evaluate any possible performance implications of such a

form.

37

Conclusion

This pilot case study highlights the need to reflect on

two interestesting aspects of the methodology adopted and

the interpretation of the findings.

Firstly, when discovering that the pilot firm could be

classified as displaying an ethnocentric management

approach there was initial disapprovement amongst the

researchers. However, on further analysis of the

findings it was recognised that there were clearly very

good business reasons for this strategic predisposition.

In this hotel group the majority of revenue and profits

are generated by the division based in the home country.

It is difficult to separate this strategic and portfolio

imbalance (in terms of the number of units but more

importantly also in terms of revenue and overall profit

performance) with the impression that the firm is driven

by home-country, ethnocentric prejudice. The company is

also listed in the home country and its visibility is

particularly high there. The researchers became aware of

38

the need to address the inclination to hold up the

geocentric model as the ‘ideal type’ (which has been

informed by some of the centricity literature) and to

forward ethnocentrism as the least appropriate model.

Secondly, having set out to investigate the centric

profile of one sample international hotel group the over-

riding influence of individual respondents’ mind-sets had

not been foreseen. Methodologically it sometimes proved

difficult to separate the functional executives’ views on

foreign cultures with the actual approach to managing

internationally adopted by the firm. This factor will

have to be considered prior to embarking upon the next

stage of the pilot research. It may prove necessary to

redevelop the research instrument to clearly distinguish

between management perceptions and actual company

procedures. The investigation of corporate documentation

may help clarify the the gap between organisational

practices and managers personal opinions.

39

During the next stage of the research the pilot study

will be extended to analyse centricity at regional and

unit levels by conducting interviews with particular area

and hotel management and staff. These second- and third-

level findings will be evaluated in order to determine

whether regional- and unit-level practices are in harmony

with corporate-level strategies and policies, and to gain

a fuller picture of the most dominant centric profile of

each international hotel group. Following completion of

the pilot study, the research will be extended to include

a broader sample of international hotel groups.

40

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43

1. Centricity Applied to Different FunctionsFunctional Area

Ethnocentric Approach

PolycentricApproach

GeocentricApproach

StrategicPlanning

Key decision makers likely to be from home country.Objective setting & formulation fromhome-country perspectives.High volume & frequency of communication in form of commands and advice from head office.Loyalty to home country.

Key decision-makers in each country of operation.Objectives devised for & implemented by each subsidiary.Communication from subsidiary to head office in form of reports.Loyalty to host country.

Key decision-makers from diverse national backgrounds. Objective setting & formulation on global basis.Communication flows in both directions &between countries ofoperation.Loyalty is to the firm.

FinancialManagement

Budgets determined& performance measured against home-country standards.Internal reportingsystems & access to information geared towards head office needs in home-country language.Incorporated & listed in home country.Profit redistribution to home country.

Benchmarked historically against host-country competition.Internal reporting on a bottom-up basis.Budgets determined at host-country level & approvedby head office.Incorporated &listed in host country.

Performance measuredagainst budget.Budget based on host-country standards.Internal reporting data available to all countries of operation.Listed on multiple markets.

MarketingManagement

Minimal product adaptation to overseas markets.Expansion based onhome-country needs.Pricing strategiesdetermined on basis of home-country standards.Marketing communications

Product customised for location.Market expansionbased on host-country needs.Pricing strategies developed to suit local economic conditions.

Product developed tosuit global standards with localadaptation.Markets selected to suit corporate strategic plans.Communications developed for globaluse with local variations.Pricing strategy for

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developed by home country.

Marketing communications developed by host country forhost country.

corporate objectives& adapted to suit local economic conditions.

Human ResourceManagement

Recruitment based on nationality before ability.Training & development opportunities greater for home-country nationals.Employee relationspractices based onhome-country policies & practices.Expatriates in keyhost country positions; remuneration in home- country currency.

Recruitment in host country forhost country. Training & development limited to host country opportunities.Employee relations practices tailoredto host country.Minimal or no use of expatriates.

Recruitment based onability

rather than nationality.

People developed through a

range of overseas assignments and

drawn together in

multicultural teams.General principles

for employee relations

adopted &draw on best

practice from different countries.International

committees & task groups.

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Table 2: Top 12 International Hotel Groups InternationalHotel Group

HomeCountr

y

Percentageof ForeignBedrooms(PFB)

Numberof

Countries (C)

Index ofInternational

ization

Holiday Inns UK 98.77 56 5531

Forte Hotels UK 77.03 61 4699Inter-Continental

Japan 95.67 47 4497

Accor SA France 64.60 66 4264New World/Ramada HK 94.69 43 4072

Hilton International

UK 84.00 47 3948

ITT Sheraton USA 41.03 65 2667

Best Western USA 38.49 47 1809Regent/Four Seasons

HK 95.16 14 1332

Hyatt USA 31.34 37 1160Nikko Japan 72.60 15 1089

Occidental Spain 85.94 12 1031(Source: Hampton, Roper and Price, 1995)

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Table 3: Assessing Centricity within Functional Areas

Functional Area Objectives set to determine the:

Strategic Planning group’s mission organisational structure process of strategy formulation most influential national culture configuration of resources and expertise

levels of local autonomy development and diffusion of knowledge throughout the group

Financial Management

process and procedures for reporting

language/currency used for reporting

process for distribution of profits/surpluses

procedures for the company audit function

financial control systems utilised

Marketing Management

procedures for determining marketing budgets

performance measures utilised procedures for undertaking marketing research

approach to targeting approach to new product development

procedures utilised when establishing prices

standardisation/customisation of promotional activities

distribution channels used throughout the group

Human Resource Management

approach to employee resourcing approach to employee development

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approach to employee relations approach to motivating staff approach to setting terms and conditions of work

human resource control systems utilised

48