Formal Report

THE TASK:

Formal report with executive summary 

    

As top management representatives having taken part in an initial negotiation session for your company, write a formal report addressed to the board of your company where you provide an account of the negotiations between TransContinental Hotels Group Plc and RoomsGlobal Ltd. 

The report should have a separate title page with ‘header’ information, then start with an Executive summary, followed by an Introduction section, outlining the background and context for the negotiations, a Discussion section (with sub-sections on various issues), where the main aspects dealt with in the negotiation meeting are presented, as well as a combined Conclusions and recommendations section, where further steps in the process are indicated. 

 Length, including executive summary (which should be approx. 10% of total number of words):

Lenght: 1050 words

You are going to write for RoomsGlobal (team B à information about this under “Position sheet: RoomsGlobal Ltd (= TEAM B)”). I have added some information about both Transcontinental and Roomsglobal so its easier to provide information about the negotiation (read this carefully). I would like the discussion section to have the sub-sections:

  • The form of business cooperation 
  • Financial issues
  • Staff and management issues

 

HERE COMES BACKGROUND INFORMATION:

Negotiation case: general background

TransContinental Hotels Plc versus RoomsGlobal Ltd

Context

The sharing economy has created a new dynamics in the hotel industry, by which traditional hotel chains are faced with increased competition from online accommodation start-ups such as AirBnB, LoveHomeSwap, onefinestay, etc.

 

Case

The case concerns negotiations between TransContinental, a large international hotel chain with some 4,900 hotels worldwide, based in London UK, and RoomsGlobal, one of the start-ups that offer online accommodation services, based in Edinburgh, UK.

You are expected to hold two meetings, an internal team meeting where you discuss the strategy for your company and your position in the negotiations, and the actual negotiation meeting with the other party.

The common aim of the two sides is to achieve (or at least discuss the possibility for) a corporate integration of the two companies, which both sides consider mutually beneficial. Major points of the discussion should be the possible alternatives for a tight or loose integration with the other party.

 

Task

You will be a group of executives in your company; this includes the individual roles of CEO, CFO and Global Human Resources Manager. Each group to be filmed will consist of a Team A (= TransContinental) and a Team B (= RoomsGlobal), with 3 (or 2) students making up each team. The teams and groups will be formed on Day 2, and position sheets for each team will be handed out then. There will not be individual role sheets, so think through all three roles in advance.

Links to background information

Inspirational video:
http://video.ft.com/4649896887001/Hotels-disrupted/Companies

Tech start-ups waiting ‘way too long’ for IPO:
http://www.ft.com/intl/cms/s/0/44fbe16e-9c2d-11e5-b45d-4812f209f861.html#axzz3uTJfufNl

Why the titans of the ‘sharing economy’ are shunning IPOs http://www.ft.com/intl/cms/s/0/166b0ca6-9fc7-11e5-8613-08e211ea5317.html#axzz3v36QK3AY

Oral portfolio assignment 1  

Position sheet: TransContinental Hotels Group Plc (= TEAM A)

TransContinental Hotels Group Plc is a chain that for many years has had a strong presence in both Europe and Asia (mainly China). By now, it has a loyalty programme with millions of members, most of whom are businesspeople. 

There is, however, clearly a potential for increased revenue by taking a larger share of the holiday market and adventurous travellers.  This has also become necessary for financial reasons.  The company was hard hit by the financial crisis and the subsequent decrease in business travel. In addition, the previous CEO and board did not take this situation seriously until it was almost too late.  Cost-cutting on all fronts as well as development of new market segments are therefore still very much on the agenda in order to keep the shareholders happy. Recent suggestions from the new board include relocating the company headquarters to somewhere less expensive than London and to replace older staff members with younger ones who are better positioned to identify new trends.

As a new management team, you believe that now is the time to acquire a successful but still relatively inexpensive hospitality company in the new sharing economy market. RoomsGlobal Ltd, a family-owned and -operated company, seems like an attractive candidate. You would be willing to let them keep the brand name as a subsidiary in your group. 

Alternatively, you may be willing to start out with a strategic partnership, where you cooperate on sharing networks of clients through a common loyalty programme, and then move on to an acquisition in a couple of years’ time. 

Strategy: 

Discuss the best way to briefly introduce your company as an attractive negotiation partner to RoomsGlobal Ltd and what you hope to obtain from the negotiations. Do not present a too rigid negotiating position at the outset. After the initial round of introductions, the CEO of TransContinental will start the negotiation session with this presentation.

Also, consider the issues listed below and establish a position on each. Decide on an order of priority for the issues. 

  • The form of business cooperation 
  • Financial issues, including indications of how to ‘join forces’ formally (cash-for-stock, stock-for-stock)
  •  Staff and management issues

This is a first negotiation meeting, where information sharing and establishing of main positions are most important. If there seems to be a basis for further talks, try to decide on a common way forward. 

 Oral portfolio assignment 1

Position sheet: RoomsGlobal Ltd (= TEAM B)

RoomsGlobal Ltd is a family-owned and -operated company which is headquartered in Edinburgh, a city with a probusiness atmosphere, offering very good tax incentives to new companies willing to relocate to the area.

The company has been in business for a couple of years and has so far focused mainly on the European market. However, more and more of your customers would also like to rent such accommodation in Asia. In order to meet this demand, and also to grow the business more generally, you are considering expanding your services to new geographical markets and customer segments. 

You are particularly keen to gain access to the membership network in the loyalty programme of a large and successful hotel chain such as TransContinental. This is a company you are not very familiar with, but which you know has a number of hotels in Asia. 

You would prefer to enter into a strategic partnership with TransContinental, where you cooperate on sharing networks of clients through a common loyalty programme. This will allow you to retain your independence as a family business, and also make it possible to keep the young enthusiastic and innovative staff who have been crucial to the success of the business.

Alternatively, you may be willing to discuss the possibility of TransContinental becoming a minority shareholder of your company through an IPO. It is, however, very important to you that RoomsGlobal survives as a brand.

You have heard that some Asians, such as the Chinese, are not so keen on renting out their private property to strangers, due to a culture which is marked by a lack of trust. In order to get access to properties, you would therefore like TransContinental to pay for national advertising campaigns (TV, newspapers) to make the RoomsGlobal concept acceptable through a connection with the well-known and respected TransContinental brand.

Strategy: 

Discuss the best way to briefly introduce your company as an attractive negotiation partner to TransContinental Hotels Group Plc and what you hope to obtain from the negotiations. Do not present a too rigid negotiating position at the outset. After the initial round of introductions, the CEO of TransContinental will present their company, and then the CEO of RoomsGlobal Ltd will do the same for your company. 

Also, consider the issues listed below and establish a position on each. Decide on an order of priority for the issues.  

  • The form of business cooperation  
  • Financial issues including − in the case of a minority shareholder solution − indications of how to ‘join forces’ formally (cash-for-stock, stock-for-stock) 
  • Staff and management issues

This is a first negotiation meeting, where information sharing and establishing of main positions are most important. If there seems to be a basis for further talks, try to decide on a common way forward…

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