This proposal addresses the issues of guanxi neglect at Chinese based hotel Roaring Dragon Hotel (RDH), a state owned enterprise that was taken over by an International management called Hotel International (HI) to arrest the declining resources of the RDH and how the employees faced the cross culture difference trying to adapt to the new modern practices set by HI. Initially RDH was a guanxi based hotel where social connections were important which led to poor efficiency in ...view middle of the document...
HI oversaw why guanxi was very important in that area and success in any business lies in appreciating the differences of both cultures and perform business accordingly. This case is a perfect example of how not to conduct International business in guanxi based organizations.
The Roaring Dragon Hotel (RDH) is a state owned enterprise which started in 1950s. It mainly conducted business based on guanxi until the Provincial government felt that the Hotel’s potential was not used properly and the management conducted business carelessly. So, the government decided to have an International Management company take over RDH to change the organizational culture prevailing at RDH and to increase the profits of the hotel or improve the quality of service that other competitors provided and also maximize the performance of the employees. For this they invited Hotel International (HI) who had an International reputation to introduce practices that could arrest the declining assets of RDH. After analyzing the pros and cons, HI signed a contract with RDH in 2002 to change the then 3-star hotel to 5- star hotel.
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