Decision Making Analysis: Hilton Hotel Expansion Strategy Report

This MBA report, submitted by Serazul Haque, analyzes decision-making processes at Hilton Hotel in the context of its business expansion strategy. The report explores the importance of decision-making, the application of decision analysis tools such as SMART, sensitivity analysis, and decision trees, and the stages involved in effective decision-making. It includes a literature review, an outline of the decision problem, and an application of the SMART technique. The report also discusses the strengths and limitations of decision-making analysis, the influence of uncertainty, and concludes with recommendations for Hilton's future decisions. The analysis highlights how effective decision-making contributes to achieving organizational goals, resolving business problems, and developing effective plans and policies, while also considering stakeholder relationships and future assumptions.

London Campus
-PROGRAMME-
MBA (Master of Business Administration)
Module: analytical thinking and decision making
PROFESSOR = Mervyn Sookun
Submitted By: Serazul Haque
Student iD: B00312237
Submission Date: 20th OCT 2016
Word Count:4000

SERAZUL HAQUE B00312237
Executive Summary
Decision making may be defined as a process in which manager makes decision by evaluating
each possible alternative. In the present era, creativity is one of the main aspects which are
highly required in the decision making aspects. Hence, by showing creativity at each level
manager can make contribution in attainment of organizational goals and objectives to the large
extent. The current research project is also based on decision making analysis. To complete
whole research author has been chosen Hilton hotel which is one of the leading organizations of
hospitality industry of UK (Vitell, Singhapakdi and Nishihara, 2015). Now, hotel unit is planning
to expand its business operations and functional aspects. In this regard, it can be summarized
from the report that SMART, sensitivity analysis and decision tree are the tools which provide
assistance to Hilton in making suitable decisions. It can be revealed from the report that Hilton
needs to take decision about location of the business by considering the growth aspects.
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TABLE OF CONTENTS
1.EXECITIVE SUMMARY……………………………………………………………………
1.INTRODUCTION ………………………………………………………………………….…3
2.IMPORTANCE OF DECISION MAKING APPLICATION OF DECISION ANALYSIS
TOOLS………………………………………………………………………………………...…..3
3. LITERATURE REVIEW…………………………………………………………………..…..3
3.1 KEY FEATURE OF DECISION MAKING………………………………………….………3
3.2 STAGES OF DECISION MAKING………………………………………………………….4
3.3 PROSPECTIVE AND APPROACH TO DECISION MAKING…………………………….4
3.4 GENERAL DECISION THEORY (Sensitivity Analysis)……………………………………5
3.5 ROLE OF DECISION MAKING …………………………………………………………….6
4. OUTLINE OF THE DECISION PROBLEM INVOLVING OBJECTIVES…………………..7
4.1 BUSINESS PROBLEM AND DECISION MAKING………………………….…….………7
5. APPLICATION OF THE SIMPLE MULTI-ATTRIBUTE RATING TECCHNIQUE (Smart)
TO THE OUTLINED DECISSION PROBLEM…………………………………………………8
6. STRENGTH AND LIMITATIONS OF DECISION MAKING ANALYSIS IN THE
CONTEXT OF DECISION PROBLEM……………………………….......................................12
6.1 INTERPRETATION OF THE RESULTS…………………………………………………..12
6.2 INFLUENCE OF UNCERTAINTY…………………………………………………………14
7. CONCLUSION………………………………………………………………………………..14
8. REFERENCES………………………………………………………………………………..15
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INTRODUCTION:
Ability of taking decisions accurately is considered as one of the top attributes of the senior
executives to be successful in management in this sophisticated business world. Unfortunately
most of the people are miserably unwilling to achieve this quality and thus they fail to take
decisions appropriately while critical situations arise (Goodwin, 2006). In this increasingly
complex business world, the difference between the successful manager and the unsuccessful
one is the degree ofpromptness and accuracy of decisions they usually take. Modern business
decisions are indescribably complicated and that complicacy put great challenges to the
managers who are in charge of taking decisions solving those. So, there is a tremendous
requirement of skills, knowledge, experience and learning regarding decision making and
analysis (Adair,2010).
3.LITERATURE REVIEW:
3.1 Key Feature Of Decision Making.
For making good and logical decisions Hilton hotel uses a number of tools and techniques and
consider different elements at the time of making an appropriate judgement. So, decision making
process is very important for business organization. Ferrell and Fraedrich, (2015) has concluded
that “Achieving the goals and objectives of the organization is considered as a major aim of
every judgement”. Therefore, it has reflected ted that decision making process plays an important
role in achieving aim, objectives, mission, visions and goal of Hilton hotel. Analysis of the
decision making process has shown that it leads to commitment which depends upon the nature
and future of the decisions (Swider et, al 2015). Most of the decisions are based on long term and
short term obligations which help in attaining future growth and development of the Hilton hotel.
In contrast, has disclosed that “Decision making process produces an outcome to resolve the
problem and that might be an action, opinion and recommendations”. Overall, judgement making
procedure is very effective for deciding an appropriate action and strategy to resolve any kind of
organizational issues which may harm the progress and wealth of Hilton hotel (Meaning and
importance of decision making, 2013).
Successful completion of the managerial functions is one of the major feature of the decision
making process. On the other hand, Vitell, Singhapakdi and Nishihara (2015) has stated that
“Sometimes the decision making process is used by organizations in evaluating business
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performance of the firm”. Moreover, has concluded that “For developing effective policies and
processes organizations need to follow a specific procedure of judgement”. Developing
appropriate policies and practices is also one of the major feature of Decision making process
which will help in the growth and development of the organization.
3.2 Stages of Decision Making:
It includes different stages such as in the first step organizations need to identify an appropriate
decision maker who must be capable enough to take a suitable decision.After wards, responsible
person needs to analyse the organizational issues which will help in understudying situation for
further decisions (Woiceshyn, 2011). Subsequently, decision making procedure should determine
different factors which can influence the organizational problem and decision maker needs to
consider these attributes at the time of making final judgment. (Triantaphyllou, 2013).
(Source: Adair, 2013)
Stages of decision making
 It includes different stages such as in the first step organizations need to identify an
appropriate decisions maker who must be capable enough to take a suitable decisions.
 Afterwards, responsible person needs to analyze the organizational issues which will help
in understudying situation for further decisions (Woiceshyn, 2011).
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 Subsequently, decision making procedure should determine different factors which can
influence the organizational problem and decision maker needs to consider these attribute
at the time of making final judgment.
 Afterwards, decision makers should identify the different alternatives for resolving
organizational issue. At the time of making decision responsible person needs to select
the best alternative to resolve this issue in effective manner (Triantaphyllou, 2013).
Therefore, all these stages are followed by a decision maker at the time of completing
decision making process.
3.4 General Decision Theory: Sensitivity Analysis:
According to Goodwin and Wright, (2013), it is decision making theory that helps significantly
in examination of sensitivity. It means, of having an improved focus on the model the sensitivity,
presence in the course of action can be judged. It is also beneficial to understand the judgments
made by the decision makers (Govindan et.al, 2015). With an assistance of this, the situations
where decision makers are not sure about the judgement can be analysed. Meskendahl (2010) has
asserted that the sensitivity analysis theory also indicates the sensitivity weights attached with
the attributes at the particular level in the hierarchy. In this respect, bar chart also needs to be
considered in an appropriate manner for effective examinations of decisions (Meskendahl, 2010).
It means by having proper analysis of these factors company can ensure that decision about
expansion is appropriate or not. Shepherd, Williams and Patzelt (2015) has also contended that
by doing sensitivity analysis company can assess or test the robustness of the results in the
uncertain business situation. It also assists in determining the relationship between the input and
output (Shepherd, Williams and Patzelt, 2015).
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(Source: Adair, 2013)
3.5 Role of Decision Making:
There are number of business problems which are faced by every organization at different levels.
These are associated with the employees and business operations such as conflicts among team
members, inappropriate inventory management, customer relationship management issues and
strategic issues, etc. (Vitell, Singhapakdi, and Nishihara, 2015). So, appropriate process of
judgement plays important role in resolving all these issues by selecting best alternative actions.
Therefore, decision making process is very significant in reducing the negative impacts of these
issues on organizational performance.
Task-1 Importance of decision making and application of decision analysis tools
Decision making analysis play an important role in attaining mission, vision and objectives of
the organizations. Every decision is based on the specific situation for resolving organization
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problems and improving business wealth. There are a number of decision making tools which are
used by companies for making suitable decisions for different departments (Govindan and et.al,
2015). Importance of decision making process and decision analysis tools are described as
below:
Importance to resolve a business problem: An organization can face
a number of business problems such as employee turnover, lack of satisfaction, poor sales
performance, negative marketing and advertisement, high competition, quality issues, etc. So,
using effective decision making process company can get appropriate solution to resolve all
these issues (Vitell, Singhapakdi, and Nishihara, 2015). For example, in case of high employee
turnover organization can use motivational techniques such as rewards and incentives, training
and development, promotions, etc. This decision helps in retaining employees and resolving
organization problem in an appropriate way. So, decision making is important for making
suitable decisions for removing organization’s issue.
Helpful in planning and policies: Organizations can develop appropriate
plans and policies using effective decision making process. Without using decision analysis
tools, company cannot develop favourable policies for employees and customers (Swider,
Zimmerman and Barrick, 2015). For example, recruitment and selection planning and policies
can be developed by using the decision regarding the recruitment and selection channels,
recruitment panel, etc. Along with this, future financial and investment planning is based on
current decisions regarding cost and cash management, reducing cost, etc. Therefore, decision
making analysis is effective for developing plans and polices for organization (Certo, 2015).
Relationship with stakeholders: every organization wants to satisfy needs
and requirements of stakeholders. Major stakeholders are customers, employees, investors,
government, suppliers, etc. Effective decisions about the CSR policies play an important role in
developing a strong association with stakeholders. As per these policies company can make
decisions about the customized products and services which can help in satisfying customer’s
needs. Employment decisions are important for increasing job satisfaction of employees, credit
and cash purchase decisions are significant for suppliers. Similarly, decisions regarding financial
reporting play significant role in making strong association with government of the nation
(Woiceshyn, 2011). Therefore, decision making is important for maintaining effective relations
with all stakeholders.
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Future assumption: Decision making tools and techniques play an important role in
making future assumptions for organizational growth and development. For example, on the
basis of the discounted cash flow methods company can make profitable future investment
decisions. These decisions play an important role in making assumptions about the future growth
and development. For example, profitable investment project will help in increasing sales and
performance of the company in future. On the basis of these decision company can make future
plans regarding finance, marketing and operation departments (Triantaphyllou, 2013).
Evaluation of the managerial performance: on the basis of the
decisions managerial performance can be evaluated in an effective manner. If decisions are
correct and helpful for organization’s success than it can be evaluated that management is
performing very well. Inappropriate decision making process identified that management of the
organization is not capable enough to take appropriate decisions regarding organization’s
performance (Govindan and et.al, 2015).
Managerial functions: Planning, directing, organizing, controlling and staffing are
major managerial functions which play important role in business success. Without effective
decision making organizations cannot implement these managerial functions in an appropriate
manner. These functions can affect the performance in a positive or negative manner. So,
effective implementation is required for business success. So, decision making and decision
analysis tools are very important for implementation of these managerial functions (Swider,
Zimmerman and Barrick, 2015).
Including this, Goodwin and Wright, (2013) has concluded that “In aspect of management
decision making process is important for effective utilization of resources and handling problems
and challenges”. Along with this, increasing business growth and production efficiency of
Hilton hotel is also one of the major role of decision making process. Further, facilitating
innovation in existing services is also one of the major benefit of this process which plays
important role in motivating employees. Overall, Decision making process plays very important
role in Hilton hotel for completing different business activities and getting success.
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4.Task 2-Outline of the decision problem involving multiple objectives
4.1 Business Problem and Decision Making:
Hilton which is one of leading hotel chains of UK is planning to expand its business operations
and functions in India. In 2015, tourism of Indian has grown by 4.4% in comparison to the
previous year. On the other side, tourism rate of Kerala increased 5.86% over the previous years.
This aspect shows that Kerala makes a significant contribution in the tourism development of
India. By considering such aspect Hilton has taken decision in relation to the establishing new
hotel unit in Kerala in India. However, now company is facing difficulty in deciding the location
at which it needs to establish hotel. Moreover, some people prefer to stay in the hotel which is
situated near the beach. Whereas, some visitors like to stay in the hotel which is situated near the
picnic spots and other famous destinations (Meskendahl, 2010). Thus, Hilton is facing difficulty
in relation to making decision about to open hotel in Cochin, Bekal, Kumarakom and Kocalam
etc. During such decision making, Hiltion has been undertaken following objectives are:
Location table
Decision attribute
Business Growth: Maximization of productivity and profitability is one of the main
aspects which will be undertaken by the firm behind the establishment of new hotel in Kerala.
Moreover, growth and success of hospitality sector are highly influenced by the tourism rate
(Triantaphyllou, 2013). In Kerala, tourism rate is increasing continuously with the very high
pace. Thus, by opening a hotel unit in Kerala Hilton can enhance its customer base and thereby
profitability aspect significantly.
Availability of Skilled Personnel: Literacy rate of Kerala is 93.91%, which is
very high in India as compared to other states. This aspect clearly shows that highly skilled and
efficient personnel are availed in Kerala. In hospitality industry, success of the firm is highly
influenced by the quality of services offered by the personnel (Werbach, 2011). In this, Hilton
would become able to deliver effectual services in Kerala. Thus, company will also make an
assessment of the extent to which highly skilled personnel are present in the various preferred
locations.
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(Source: Saran, 2004)
Reduction in the Cost of Business Operations: Getting high
economies of scale is one of the main objectives of the Hilton behind expanding business
operations in Kerala. In this, business enterprise will make an analysis of the suppliers which are
available in the various areas of Kerala.
Convenience: It is another most important factors which closely affect the decision
making aspect of the customers. In the present era, customers give priority to the hotel which is
situated in posh area of the city. Further, with the aim to make stay and holiday experience more
memorable customer also have a desire to stay in the hotel which is situated near to beach,
museums and other famous places. Convenience in terms of transportation is also another
significant factor which affects decision making aspects of the customers (Woiceshyn, 2011). In
order to fulfill such objective company is facing difficulty in relation to making decision about
one of the four areas at which it should establish hotel.
Resource Availability: There are several resources which business unit requires for
starting a business in new cities or states in terms of financial, human and others. Moreover, the
cost of labour or personnel highly differs from country to country. In this, Hilton can attain its
profit maximization objective by opening a hotel unit in a suitable place where the cost of labour
is not really very high (Zsambok and Klein, 2014). Further, different areas of Kerala impose
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variable costs in front of the business unit related to monetary aspects. In this, Hilton also needs
to make ananalysis of the fund, which it requires for establishing hotel.
5.TASK- 3 Apply the SMART to the outlined decision problem
Ho, Xu and Dey (2010) stated that SMART technique is based on the linear additive model in
which overall value of the present alternatives are evaluated on the basis of scores and attributes.
The Simple Multi-Attribute Rating Technique or SMART, is one of the greatest useful decision
analysis tools which could be followed by the top management of Hilton Hotel. These methods
depend on raking the alternative in light of a quantitative weighted normal rating ascertained by
duplicating the weights of a specific criteria with the rating that the choice scored as far as
meeting that aspects (Patzelt,2015). The alternative with the most elevated rating is, the better
choice. This method includes 8 stages which are delineated and connected below.
Stage 1: In the very first step decision maker is identified by the business organization. For
instance: Hilton has made team by including the personnel of varied departments such a finance,
marketing and R&D. In this, senior managers of all these departments have responsibility to take
decision.
Stage 2: At this, the decision team assesses the issue on the basis of its utility. On the basis of
this aspect, decision team of Hilton has identified that increase in profitability is one of the main
objectives of the firm. Thus,a team is assigned with the responsibility to select suitable factor for
decision making.
Stage 3: In this, business unit has identified that there are mainly four areas in which Hilton can
make open hotel such as Cochin, Bekal, Kumarakom and Kocalam.
Stage 4: Once identification of the areas have identified, thereafter decision team determines
the factors which they will consider during decision making. In this regard,the team has assessed
several factors which have a high level of influence on the success of a hotel chain. Such factors
include business growth, cost reduction, availability of skilled human resources and other
resources (Govindan and et.al, 2015). In this way, by considering all such factors company is
able to make effective decisions which aid in the growth of it.
Factors Rank or value (1-5)
5 = high
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